PROTEST S, SANCTIONS,

BLACKLISTING, AND
TERMINATION

Government Procurement Policy Board – Technical Support Office

 PROTEST MECHANISM

Government Procurement Policy Board – Technical Support Office

 PROTEST ON DECISIONS OF
BAC
Decisions of the BAC at any stage of the procurement process may
be questioned by filing a request for reconsideration
If RR is DENIED,
Filing of Request for
BAC Resolution decision of the BAC
Reconsideration
(3) calendar days upon
may be protested in
Within seven (7) writing (Verified
receipt of written notice
calendar days from Position Paper) to the
or upon verbal
receipt of RR
notification HOPE

Provided:
1. That a prior request for
reconsideration should have
been filed by the party concerned
in accordance with the preceding
Section, and
2. Request for reconsideration has
been resolved.
3
 REQUISITES FOR FILING A VALID
PROTEST
1. Must be in writing (Verified Position Paper);

2. Addressed to the HOPE;

3. Filed within seven (7) cd from receipt by the party

concerned of the resolution of the BAC denying its
request for reconsideration; and

4. Accompanied by the payment of a non-refundable

protest fee.

5
 VERIFIED POSITION PAPER
The verified position paper shall contain the following
information:

1. The name of bidder;

2. The office address of the bidder;
3. The name of project/contract;
4. The implementing office/agency or procuring entity;
5. A brief statement of facts;
6. The issue to be resolved;
7. Such other matters and information pertinent and
relevant to the proper resolution of the protest; and
8. Certification against forum shopping

6
 VERIFIED POSITION PAPER

To be considered verified, the position paper shall

contain an affidavit stating that the affiant:

1. has read and understood the contents thereof, and

2. allegations therein are true and correct of based on
authentic records or on his personal knowledge.

7
 VERIFIED POSITION PAPER
In addition, the bidder shall likewise execute under oath a
certification against forum shopping stating that:

1. he has not commenced any action or filed any claim in any

court, tribunal or quasi-judicial agency, involving the same
issue;
2. to the best of his knowledge, no such other action or claim
is pending therein;
3. shall include a complete statement of the present status of
the pending claim or action, should there be any; and
4. should he thereafter learn that the same or similar action or
claim is pending, he shall report that fact to the Procuring
Entity wherein his protest is filed within 5 days therefrom.

8
 VERIFIED POSITION PAPER

 An unverified position paper shall be considered

unsigned, produces no legal effect, and results to the
outright dismissal of the protest.

 Failure to comply with the requirements shall not be

curable by mere amendment of the verified position
paper.

9
 RESOLUTION OF PROTESTS
Denied Request for Protest must be HOPE shall resolve
Reconsideration filed within 7 the protest within 7
calendar days from calendar days from
receipt by the party receipt thereof
concerned of the
resolution of the
BAC denying its
request for
reconsideration. Head of BAC Sec
shall furnish a copy
of the decision
• In the form of a within 7 calendar
Verified Position days from receipt.
Paper
• Payment of non-
refundable protest
fee
10
 RESORT TO REGULAR COURTS

 Court Action may be resorted to only after the protest shall

have been resolved with finality. (Doctrine of Exhaustion of
Administrative Remedies)

Land Bank of the Philippines v Atlanta Industries, Inc., G.R.

No. 193796 , July 2, 2014

11
 RESORT TO REGULAR COURTS

 Non-compliance with this statutory requirement, under Section

58 of R.A. No. 9184, constitutes a ground for the dismissal of
the action for lack of jurisdiction.

Dimson (Manila), Inc. and Phesco, Inc. v Local Water Utilities

Administration, G.R. No. 168656, September 22, 2010.

 Regional Trial Court under Certiorari (Rule 65)

12
 RESORT TO REGULAR COURTS

 Protest must comply with Section 55 of R.A. 9184.

Where the protest was not verified and the protest fee
was not paid, respondent was held to have failed to
avail of the correct protest procedure before it filed its
petition for annulment of the award before the RTC.

Land Registration Authority, et. al. vs Lanting Security

and Watchman Agency, G.R. No. 181735

13
 PROTEST FEES
GPPB Resolution 05-2012
ABC RANGE PROTEST FEE
50 million pesos and below 0.75% of the ABC
More than 50 million pesos to 100 PhP 500,000.00
million pesos
More than 100 million pesos to 0.5% of the ABC
500 million pesos
More than 500 million pesos to 1 PhP 2,500,000.00
billion pesos
More than 1 billion pesos to 2 0.25% of the ABC
billion pesos
More than 2 billion pesos to 5 PhP 5,000,000.00
billion pesos
More than 5 billion pesos 0.1% of the ABC

14
 PENAL, CIVIL, AND
ADMINISTRATIVE
PROVISIONS

Government Procurement Policy Board – Technical Support Office

 STANDARD OF ETHICS
Highest Standard of Ethics

• The standard of ethics required to be observed by

procuring entities and bidders, manufacturers, suppliers
or distributors during the procurement and execution of
contract.

• Bidders determined to have committed corrupt,

fraudulent, collusive and coercive practices by the
government will not be eligible to bid in its projects.

Government Procurement Policy Board – Technical Support Office

PENAL PROVISIONS

Government Procurement Policy Board – Technical Support22Office

 COVERAGE
• Without prejudice to the provisions of Republic Act No.
3019, otherwise known as the “Anti-Graft and Corrupt
Practices Act” and other penal laws.

COVERAGE:

1. Public officers who commit any of the acts enumerated

under Section 65.1 of the IRR, and the private
individuals who collude with them.
2. Private individuals who commit any of the following acts
enumerated under Sections 65.2 and 65.3 of the IRR,
and public officer who conspires with them.
Government Procurement Policy Board – Technical Support Office
 COVERAGE

 It shall cover all types of procurement whether done

manually or electronically.

 When the bidder is a juridical entity, criminal liability and

the accessory penalties shall be imposed on its
directors, officers or employees who actually commit
any of the foregoing acts.

Government Procurement Policy Board – Technical Support Office

 COVERAGE

 If a person previously held liable or found guilty under

the provisions of the Act and this IRR has a controlling
interest in a prospective bidder-entity the said bidder-
entity shall be disqualified to participate in any
procurement activity being conducted by the
Government.

Government Procurement Policy Board – Technical Support Office

 APPLICABLE PENALTY

 Imprisonment for not less than six (6) years and one
(1) day but not more than fifteen (15) years.

 Penalty of temporary or perpetual disqualification from

public office (Public Official)

 Permanent disqualification from transacting business

with the government (Private Individual)

Government Procurement Policy Board – Technical Support Office

 JURISDICTION

Jurisdiction over the offenses defined under this

Rule shall belong to the appropriate courts,
according to laws existing at the time of the
commission of the offenses.

Government Procurement Policy Board – Technical Support Office

 OFFENSES COMMITTED
BY PUBLC OFFICERS
Section 65(a) of RA 9184

1. Opening of sealed bid/document or divulging their

contents
2. Delaying without justifiable cause the procurement
process
3. Unduly influencing or exerting undue pressure
4. Splitting of contracts
5. Abuse of power by the Head of Agency

Government Procurement Policy Board – Technical Support Office

 OFFENSES COMMITTED
BY PUBLC OFFICERS
1. Open any sealed Bid including but not limited to Bids
that may have been submitted through the electronic
system and any and all documents required to be
sealed or divulging their contents, prior to the
appointed time for the public opening of Bids or other
documents.

2. Delaying, without justifiable cause, the screening for

eligibility, opening of bids, evaluation and post
evaluation of bids, and awarding of contracts beyond
the prescribed periods of action.

Government Procurement Policy Board – Technical Support Office

 OFFENSES COMMITTED
BY PUBLC OFFICERS
3. Unduly influencing or exerting undue pressure on
any member of the BAC or any officer or employee of
the procuring entity to take a particular action which
favors, or tend to favor a particular bidder.

4. Splitting of contracts which exceed procedural

purchase limits and competitive bidding.

5. When the head of the agency abuses the exercise of

his power to reject any and all bids as mentioned
under Section 41 of this Act with manifest preference to
any bidder who is closely related to him in accordance
Governmentwith Section
Procurement 47– Technical
Policy Board of thisSupport
Act.Office
 OFFENSES COMMITTED
BY PRIVATE INDIVIDUALS
Section 65(b) of RA 9184

1. Agreement and submission to submit bids with pre-

arranged lowest bid
2. Malicious submission of different bids through two or
more persons
3. Agreement to secure undue advantage
4. Employment of scheme disadvantageous to the public

*Public officers conspiring with the private individuals are

also liable under the provision.
Government Procurement Policy Board – Technical Support Office
 OFFENSES COMMITTED
BY PRIVATE INDIVIDUALS
1. When two or more bidders agree and submit different
bids as if they were bona fide, when they know that one
or more of them was so much higher than the other that
it could not be honestly accepted and that the contract
will surely be awarded to the pre-arranged lowest bid.

2. When a bidder maliciously submits different bids through

two or more persons, corporations, partnerships or any
other business entity in which he has interest to create
the appearance of competition that does not in fact exist
so as to be adjudged as the winning bidder.

Government Procurement Policy Board – Technical Support Office

 OFFENSES COMMITTED
BY PRIVATE INDIVIDUALS
3. When two or more bidders enter into an agreement
which call upon one to refrain from bidding for
procurement contracts, or which call for withdrawal of
Bids already submitted, or which are otherwise
intended to secure an undue advantage to any one of
them.

4. When a bidder, by himself or in connivance with others,

employs schemes which tend to restrain the natural
rivalry of the parties or operates to stifle or suppress
competition and thus produce a result disadvantageous
to the public.
Government Procurement Policy Board – Technical Support Office
 OFFENSES COMMITTED
BY PRIVATE INDIVIDUALS
Section 65(c) of RA 9184
1. Submission of eligibility requirements containing false
information of falsified documents or concealment of
such information
2. Submission of bidding documents containing false
information of falsified documents or concealment of
such information
3. Using name of another or allowing another to use one’s
name
4. Withdrawal of bid

* Public officers conspiring with the private individuals are also liable
under
Government the provision.
Procurement Policy Board – Technical Support Office
 OFFENSES COMMITTED
BY PRIVATE INDIVIDUALS
1. Submit eligibility requirements of whatever kind and
nature that contain false information or falsified
documents calculated to influence the outcome of the
eligibility screening process or conceal such information
in the eligibility requirements when the information will
lead to a declaration of ineligibility from participating in
public bidding.

2. Submit Bidding Documents of whatever kind and nature

that contain false information or falsified documents or
conceal such information in the Bidding Documents, in
order to influence the outcome of the public bidding.
Government Procurement Policy Board – Technical Support Office
 OFFENSES COMMITTED
BY PRIVATE INDIVIDUALS
3. Participate in a public bidding using the name of
another or allow another to use one’s name for the
purpose of participating in a public bidding.
4. Withdraw a Bid, after it shall have qualified as the
Lowest Calculated Bid/Highest Rated Bid, or refuse to
accept an award, without just cause or for the purpose
of forcing the Procuring Entity to award the contract to
another bidder. This shall include the non-submission
within the prescribed time, or delaying the submission
of requirements such as, but not limited to,
performance security, preparatory to the final award of
the contract.
Government Procurement Policy Board – Technical Support Office
 CIVIL LIABILITY

Government Procurement Policy Board – Technical Support42Office

 CIVIL LIABILITY

Without prejudice to administrative sanctions that may be

imposed in proper cases, a conviction under the Act and
this IRR or R.A. 3019 shall carry with it civil liability, which
may either consist of:

 Restitution for the damage done; or

 Forfeiture in favor of the government of any unwarranted

benefit derived from the act or acts in question or both,
at the discretion of the courts.

Government Procurement Policy Board – Technical Support Office

ADMINISTRATIVE
SANCTIONS

Government Procurement Policy Board – Technical Support45Office

 ADMINISTRATIVE SANCTIONS

In addition to the penal and civil sanctions, the HOPE,

subject to the authority delegated to the BAC, if any, shall
impose on bidders or prospective bidders, the
administrative penalty of:

 Suspension for 1 year (first offense); for 2 years (second

offense) from participating in the public bidding process,
and disqualification from further participating in the
public bidding being undertaken by the PE
 Forfeiture of Bid Security or the Performance Security

Government Procurement Policy Board – Technical Support Office

 ADMINISTRATIVE SANCTIONS

 The procedures for the blacklisting of manufacturers,

suppliers, distributors, contractors, or consultants for
Government projects shall be undertaken in accordance
with the guidelines to be issued by the GPPB. (GPPB
Resolution No. 40-2017 09-2004, pursuant to 69.4 of
the Revised IRR)

Government Procurement Policy Board – Technical Support Office

 BLACKLISTING

Government Procurement Policy Board – Technical Support48Office

 BLACKLISTING AND SUSPENSION
BLACKLISTING
 An administrative penalty disqualifying a person or an
entity from participating in any government procurement
for a given period.

SUSPENSION
 The administrative interim penalty imposed for
infractions committed by a contractor during competitive
bidding stage, whereby such contractor is prohibited
from further participation in the bidding process of an
agency.

49
 SANCTIONS

I. FIRST OFFENSE:
 Suspension Blacklisting for one (1) year

II. SECOND OFFENSE:

 Suspension Blacklisting for two (2) years

III. Bid Security or Performance Security is also forfeited

- without prejudice to the imposition of additional administrative

sanctions as the internal rules of the agency may provide
and/or further criminal prosecution.

50
COMPETITIVE BIDDING
PROCUREMENT STAGE

Government Procurement Policy Board – Technical Support51Office

 GROUNDS FOR BLACKLISTING

1. Submission of eligibility requirements containing false

information or falsified documents.
2. Submission of Bids that contain false information or
falsified documents, or the concealment of such
information in the Bids in order to influence the
outcome of eligibility screening or any other stage of
the public bidding.
3. Allowing the use of one’s name , or using the name of
the name of another for purpose of public bidding.

52
 GROUNDS FOR BLACKLISTING

4. Withdrawal of a bid, or refusal to accept an award, or

enter into contract with the government without
justifiable cause, after he had been adjudged as having
submitted the Lowest Calculated Responsive Bid or
Highest Rated Responsive Bid.
5. Refusal or failure to post the required performance
security within the prescribed time.

53
 GROUNDS FOR BLACKLISTING

6. Refusal to clarify or validate in writing its Bid during

post qualification within a period of seven (7) calendar
days from receipt of the request for clarification.
7. Any documented unsolicited attempt by a bidder to
unduly influence the outcome of the bidding in his
favor.
8. All other acts that tend to defeat the purpose of the
competitive bidding, such as habitually withdrawing
from bidding or submitting late bids or patently
insufficient bids, for at least three (3) times within a
year, except for valid reasons.

54
 PROCEDURES FOR BLACKLISTING
Contractor shall
Initiation of BAC notifies submit its written
Action Contractor in answer to BAC
writing upon with
verification of documentary
existence of evidence and
grounds request for
Who may initiate? hearing, if he so
• Any bidder/prospective desires, within 5
bidder • That a complaint has cd from receipt
• Duly authorized observer been filed of notification
• BAC • That he has
opportunity to show
NO TIME
cause
EXTENSION
• That a hearing shall be
SHALL BE
conducted, upon ALLOWED
request
• The consequence of
being blacklisted 55
 PROCEDURES FOR BLACKLISTING
IF CONTRACTOR DOES NOT SUBMIT ANSWER
C DISMISS
O THE
BAC Within 15 cd NO
N CASE
Does recommends to from receipt of
T BAC resolution
R NOT the HOPE the
suspension of and records of
A Submit BAC Proceeding,
answer the Contractor
C and the HOPE
T forfeiture of bid determines
O security. existence of YES HOPE
R reasonable issues a
cause Suspension
Order and
forfeiture
Within 5 cd from of bid
receipt of security
notification from
BAC
56
 PROCEDURES FOR BLACKLISTING
BAC immediately
IF CONTRACTOR SUBMITS ANSWER sets the date and
time for hearing

C YES BAC conducts hearing

O
N
T Request
Submits BAC determines
R for NO
answer hearing existence of fault
A
C YES NO
T
O HOPE DISMISS
R Base on the issues a THE
complaint, answer Suspension CASE
Within 5 cd from and documentary Order and
receipt of evidence and facts forfeiture
notification from verified of bid
BAC security
57
 PROCEDURES FOR BLACKLISTING
EFFECT OF DECISION:

1. Contractor is suspended upon receipt of the notice of

decision (DECISION TO SUSPEND).
2. The suspension shall remain in effect during the period
of motion for reconsideration and protest appeal and
shall terminate only upon a reversal of the decision by
HOPE or appellate authority.
3. If no motion for reconsideration or protest appeal is
filed, the decision shall become final and executory
after the lapse of 7 calendar days from the receipt of
the notice of decision.

58
 PROCEDURES FOR BLACKLISTING
IF CONTRACTOR FILES MOTION
C
FOR RECONSIDERATION NO HOPE issues
O Blacklisting Order
HOPE
N resolves
T Files MR motion YES
Protest Appellate
R within 7 cd Authority
A from receipt resolves
C protest
T Within 3 cd from
within 7cd
O Filed with the
receipt of notice of
R appellate authority
decision, base on
within 7 cd from
the ff:
receipt of notice If protest is NOT
1. Decision does
not conform granted, HOPE
with the issues Blacklisting
evidence/facts Order.
2. Newly
discovered
evidence 59
 PROCEDURES FOR BLACKLISTING

C
O
N Does HOPE issues Agency GPPB posts
T NOT file Blacklisting submits copy the
R MR Order of Blacklisting
A Blacklisting Order in the
C Order to GPPB
T GPPB within Website
O 7 cd after its
R issuance
Within 3 cd from
receipt of notice of
decision,

IF CONTRACTOR DOES NOT FILE MOTION

FOR RECONSIDERATION
60
 STATUS OF BLACKLISTED
PERSON/ ENTITY
When does Blacklisting Order become final and executory?

1. If the bidder did not file a MR on the Decision to Suspend, said

Decision becomes final and executory after the lapse of 7 days
counted from receipt of the Notice of the Decision; or,

2. If the bidder did not file a Protest after his MR has been
denied, the Decision becomes final and executory after the
lapse of 7 days counted from receipt of the resolution on the
motion for reconsideration; or,

3. If a Protest was filed and the same was denied, the Decision
becomes final and executory upon receipt by the agency and
person/entity concerned of the Decision on the protest.
61
 STATUS OF BLACKLISTED PERSON/
ENTITY
When does Blacklisting Order become final and executory?

1. If the bidder did not file a MR on the Decision to Suspend, said

Decision becomes final and executory after the lapse of 7 days
counted from receipt of the Notice of the Decision; or,

2. If the bidder did not file an Protest Appeal after his MR has
been denied, the Decision becomes final and executory after
the lapse of 7 days counted from receipt of the resolution on
the motion for reconsideration; or,

3. If an Protest Appeal was filed and the same was denied, the
Decision becomes final and executory upon receipt by the
agency and person/entity concerned of the Decision on the
protest.
63
 CONTRACT
IMPLEMENTATION
STAGE

Government Procurement Policy Board – Technical Support65Office

 GROUNDS FOR BLACKLISTING
1. Failure of the contractor, due solely to his fault or
negligence, to mobilize and start work or performance
within the specified period in the Notice to Proceed
(“NTP”);

2. Failure by the contractor to fully and faithfully comply

with its contractual obligations without valid cause, or
failure by the contractor to comply with any written
lawful instruction of the procuring entity or its
representative(s) pursuant to the implementation of the
Contract;

66
 GROUNDS FOR BLACKLISTING

3. Assignment and subcontracting of the contract or any

part thereof or substitution of key personnel named in
the proposal without prior written approval by the
procuring entity;

4. For the procurement of goods, unsatisfactory progress

in the delivery of the goods by the manufacturer,
supplier or distributor arising from his fault or
negligence and/or unsatisfactory or inferior quality of
goods, as may be provided in the contract;

67
 GROUNDS FOR BLACKLISTING

5. For the procurement of consulting services, poor

performance by the consultant of his services arising
from his fault or negligence;

6. For the procurement of infrastructure projects, poor

performance by the contractor or unsatisfactory quality
and/or progress of work arising from his fault or
negligence as reflected in the Constructor's
Performance Evaluation;

68
 GROUNDS FOR BLACKLISTING

7. Willful or deliberate abandonment or non-performance

of the project or contract by the contractor resulting to
substantial breach thereof without lawful and/or just
cause;

In addition to the penalty of suspension, the

performance security shall also be forfeited.

69
 PROCEDURE FOR BLACKLISTING
1. Undertake Contract Termination Proceedings: Refer to
Guidelines on Termination of Contracts under GPPB
Resolution No. 18-2004 dated 22 December 2004

2. HOPE shall immediately issue a Blacklisting Order

disqualifying the erring contractor from participating in
the bidding of all government projects upon
termination of the contract due to default of contractor.

3. Forfeiture of performance security

70
 PROCEDURE FOR BLACKLISTING
4. Where contract termination is no longer possible, but
the contractor committed acts which may constitute
ground(s) for blacklisting, the implementing unit shall,
within (7) days after the lapse of project duration, cause
the execution of a verified report, with all relevant evidence
attached, subject to the following procedures:

a. Issuance by HoPE of Notice of Blacklisting

b. Within 7 cd from receipt of notice contractor shall
submit a verified position paper stating why it should
not be blacklisted; and
c. Decision within 10 cd by the HoPE.
71
 BLACKLISTING UNDER
ALTERNATIVE METHODS OF
PROCUREMENT
Suspension or blacklisting of suppliers, contractors, or
consultants shall be made in accordance with the Uniform
Guidelines for Blacklisting of Manufacturers, Suppliers,
Distributors, Contractors, and Consultants. A suspended or
blacklisted supplier, contractor or consultant shall not be
allowed to participate in all procurement opportunities
of the government for the duration of the suspension
or blacklisting, regardless of the modality of
procurement employed by the Procuring Entity.
 PROCEDURE FOR BLACKLISTING

 Removal of a person/entity from the Consolidated

Blacklisting Report.

 Automatically delisted after the period of the penalty

shall have elapsed, unless blacklisting agency requests
the GPPB to maintain the blacklisted person/entity in the
list for justifiable reasons. Delisting shall be made after
the issuance of the agency of a Delisting Order.

73
 TERMINATION OF
CONTRACTS
(Annex “I” of 2016 IRR of RA 9184)

Government Procurement Policy Board – Technical Support77Office

 GROUNDS FOR TERMINATION

1. Termination for Default;

2. Termination for Convenience;
3. Termination for Insolvency;
4. Termination for Unlawful Acts; and
5. Termination by Contractor / Consultant.

78
 TERMINATION FOR DEFAULT
The PE shall terminate a contract when any of the following
conditions attend its implementation:
1. In contracts for Goods
a. outside force majeure, the Supplier fails to perform or
deliver any or all of the Goods, wherein such failure
amounts to at least 10% of the contract price;
b. As a result of force majeure, the Supplier is unable to
deliver or perform any or all of the Goods, wherein such
failure amounts to at least 10% of the contract price, for a
period of not less than 60 cd after receipt of notice from the
PE that the force majeure is deemed to have ceased;
c. The Supplier fails to perform any other obligation under the
Contract.
79
 TERMINATION FOR DEFAULT

2. In contracts for Infrastructure Projects

a. Due to Contractor’s fault and while the project is on-

going, it has incurred a negative slippage of 15% or
more;
b. After the expiration of the contract time, the
Contractor incurred negative slippage of 10% or
more, due to its own fault; or

80
 TERMINATION FOR DEFAULT
2. In contracts for Infrastructure Projects

c. The Contractor commits any or all of the following:

i. Abandons the contract works, refuses or fails
to comply with a valid instruction of the PE or
fails to proceed expeditiously and without delay
despite a written notice by the PE;
ii. Does not have the listed minimum essential
equipment in the project site in accordance
with the approved work plan and equipment
deployment schedule;

81
 TERMINATION FOR DEFAULT
2. In contracts for Infrastructure Projects

c. The Contractor commits any or all of the

following:
iii. Does not execute the works in accordance with
the contract or neglects to carry out its
contractual obligations;
iv. Neglects or refuses to remove materials or
perform a new work that has been rejected as
defective or unsuitable; or
v. sub-lets any part of the works without
approval of the PE.
82
 TERMINATION FOR DEFAULT
3. In contracts for Consulting Services
a. outside force majeure, the Consultant fails to deliver
or perform the Outputs and Deliverables within the
period specified in the contract, or within any granted
extension;
b. As a result of force majeure, the Consultant is unable
to deliver or perform a material portion of Outputs
and Deliverables for a period of not less than 60 cd
after receipt of notice from the PE that the force
majeure is deemed to have ceased;
c. The Consultant fails to perform any other obligation
under the Contract.
83
 TERMINATION FOR
CONVENIENCE
 The PE may terminate the contract at any time for
its convenience.

 The HOPE shall determine the existence of conditions

that would make the project implementation
economically, financially or technically impractical
and/or unnecessary.

84
 TERMINATION FOR INSOLVENCY

 The PE shall terminate the contract if the

Supplier/Contractor/Consultant is declared bankrupt or
insolvent.

 The bankruptcy/insolvency of the Supplier/Contractor/

Consultant must be that as determined by a court of
competent jurisdiction.

85
 TERMINATION FOR UNLAWFUL
ACTS
 The PE may terminate the contract in case it is
determined prima facie that the Supplier/
Contractor/ Consultant has engaged, before or
during the implementation of the contract in unlawful
deeds and behaviors relative to the contract acquisition
and implementation.

86
 TERMINATION FOR UNLAWFUL
ACTS
 Unlawful acts include, but not limited to, the following:

i. Corrupt, fraudulent, collusive and coercive

practices;
ii. Drawing up or using forged documents;
iii. Using adulterated materials, means or
methods, or engaging in production contrary to rules
of science or the trade;
iv. Any other act/s analogous to the foregoing.

87
 TERMINATION BY CONTRACTOR/
CONSULTANT
1. In contracts for Infrastructure Projects
 The Contractor may terminate his contract with the PE
if the works are completely stopped for a
continuous period of at least 60 cd, through no
fault of its own for the following reasons:
i. Failure of PE to deliver supplies, materials, right-of-
way, or other items under the terms of the
contract; or
ii. Works is disrupted by adverse peace and order
situation, certified by the AFP Provincial
Commander and approved by the Secretary of
National Defense.
88
 TERMINATION BY CONTRACTOR/
CONSULTANT

2. In contracts for Consulting Services

 The Consultant may terminate its agreement with the

PE if the latter is in material breach of its contractual
obligations and has not remedied the same within 60
cd from receipt of the Consultant’s notice specifying
such breach.

89
 PROCEDURES FOR TERMINATION OF
CONTRACTS

1. Verification

 The implementing unit shall, within 7cd from receipt

of written report of acts or causes which may
constitute ground/s for termination, verify the
existence of such grounds, and shall execute a
Verified Report, with all relevant evidence attached.

90
 PROCEDURES FOR TERMINATION OF
CONTRACTS
2. Notice to Terminate
 The HOPE shall terminate contract only by written
notice to the Contractor/Supplier stating therein the
following:
i. the grounds and the statement of the acts that
constitute the grounds for which the contract is being
terminated;
ii. extent of termination;
iii. an instruction to the Supplier/ Contractor/Consultant to
show cause why the contract should not be
terminated; and
iv. special instruction of the PE, if any.

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2. Notice to Terminate

 The PE may withdraw the Notice to Terminate, at

any time before the receipt of the Supplier’s/
Contractor’s/ Consultant’s position paper.

 Withdrawal of Notice to Terminate shall be based on

PE’s determination that items or works, subject of
the notice, had been completed, delivered, or
performed.

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3. Show Cause

 A Verified position paper shall be submitted by the

Supplier/ Contractor/ Consultant to the HOPE within
7cd from receipt of the Notice of Termination.

 Failure by the Supplier/ Contractor/ Consultant to

submit the verified position paper within the
reglementary period shall cause the HOPE to issue
an Order of termination.

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4. Decision

 Within a non-extendible period of 10 cd upon receipt

of the verified position paper, the HOPE shall
decide, whether or not to terminate the contract.

 Failure by the Supplier/ Contractor/ Consultant to

submit the verified position paper within the
reglementary period shall cause the HOPE to issue
an Order of termination.

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4. Decision

 Termination shall be based only on the ground/s

stated in the Notice to Terminate.
 HOPE may create Contract Termination Review
Committee (CTRC) to assist him in the discharge of
his function.
 All findings or decisions of the CTRC are subject to
the approval of the HOPE.

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5. Take-over of Contracts

 If a PE terminates a contract due to default,

insolvency, or for a cause, it may enter into a
Negotiated Procurement pursuant to Section 53(c)
of RA 9184 and 53.3 of its IRR.

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 Sections 53.3.1 to 53.3.3 of the IRR of RA 9184
provides for the procedures in conducting the
negotiation, thus:
1. The contract may be negotiated starting with the second lowest
calculated/highest rated bidder for the project under
consideration at the bidder’s original bid price.

2. If negotiation fails, then negotiation shall be done with the third

lowest calculated/highest rated bidder at his original price. If
the negotiation fails again, a short list of at least three (3)
eligible contractors shall be invited to submit their bids, and
negotiation shall be made starting with the lowest
calculated/highest rated bidder.

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 Sections 53.3.1 to 53.3.3 of the IRR of RA 9184
provides for the procedures in conducting the
negotiation, thus:
3. Authority to negotiate contracts for projects under
these exceptional cases shall be subject to prior
approval by the Heads of the Procuring Entities
concerned, within their respective limits of approving
authority.

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6. PE’s options in Termination for Convenience
 Applies only to contract for Goods
 Goods shall be accepted if performed or are ready for
delivery within 30 cd after receipt of Supplier’s Notice to
Terminate at the contract terms and prices.
 Goods not yet performed or ready for delivery, PE may elect:
i. to have any portion delivered or performed and paid at the
contract terms and prices; and/or
ii. to cancel the remaining and pay to the Supplier an agreed
amount for partially completed or performed goods and for
materials and parts previously procured by the Supplier

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7. Notice by Contractor/Consultant

 Written notice must be served to the PE at least 30

cd before its intended termination.

 Contract is deemed terminated if it is not resumed in

30 cd after receipt of such notice by the PE.

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 TH A NK Y O U !

CONTACT US AT:

Unit 2506 Raffles Corporate Center

F. Ortigas Road, Ortigas Center
Pasig City, Philippines 1605

TeleFax: (632)900-6741 to 44
Email address: gppb@gppb.gov.ph

Government Procurement Policy Board – Technical Support Office