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SIXTEENTH CONGRESS OF TlU:

REPUBLIC OF THE PHILIPPINES

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Second Reglliar Se.~.~ilJtl

S.B.

JAN 28 P3 :05

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INTRODUCED BY Senatol' n:OFISTO "TG" GlJINGONA III

AN ACT
AMENJ)lNG REPUBLIC ACT NO, 9184, OTHE:RWISE KNOWN AS "AN ACT
PROVIDING FOR THE MODERNIZATION, STANDARI>IZATION, AND
REGULATION OFTHE PROClJIU:Mf:NTACTlVITlES OF'I'lU:GOVERNMF:NT
AND .... OR OTHER PURPOSES"
EXPLANATORY NOTE
Considering the existence of big-ticket infrastructure projects of the government, which
may require more than one year to finish, there is a need to amend the "Govemment
Procurement Reform Act," to allow the funding of such projects across several years. Under the
current set-up, the Approved Budget for the Contract (ABC) for a project in the Geoeral
Appropriations Act (GAA), covers only one (I) year. Because of this limitation, a massive
infrastructure project is at times, split into several one-year contracts, which in the long run, is
inefficient, uneconomical, and time-consuming. Creating sub-contracts to implement just one
infrastructure project may also lead to opportunities for graft and corruption.
Allowing a single "multi-year contract" under the Goverument Procurement Reform Act,
would promote better management of the infrastructure project. The progress of such projects
would then be easily monitored. Accountability for defects and deficiencies will, as a result of
this kind of contract, will also be easily identified.
[n line with the need for budget efficiency in the construction of government projects, is
the promotion of "value engineering," a system by which, essentially, the value of the project is
enhanced by rationalizing its design, thercby making the project also more cost-efficient
Multi-year contracts and Value Engineering should therefore be institutionalized, in order
to ensure that government funds shall not be subject of wastage, fraud, or corruption.
[n view of the foregoing, the immediate enactment of this measure'

7"1)C(f1;:n~

Iy sought.

SIXTEENTII CONGRESS OF TIlE

REPlJULIC OF THE PlHLlPPINES

Second Recultlr SessuJII

JAN 28 P3 :05

S.13. No.

,
"

2589

Introduced by Senator TEOFISTO "TG" GUINGONA III

AN ACT
AMENDING Rt;PlJlJLlC ACT NO. 9184, OTIlf:RWISE KNOWN AS AN ACT
PROVIDING FOR THI!: MODI!:RNIZATION, STANDARDIZATION, AND
REGULATION OF TIlE PROClJREMENT ACTlVITmS OF THE (;OVERNMENT
AND FOR OTHER PURPOSES

lie it enacted by the Senate and the HOllse

Congress assembled:
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Representatives of the Philippines in

SECTION 1. SECTION 5 (A) OF REPUBLIC ACT NO. 9184 [S HEREBY

AMENDED TO READ AS FOLLOWS

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"(a) Approved Budget for the Contract (ABC) ... refers to the budget for the contract duly
approved by the Head of the Procuring Entity. as provided for in the General Appropriations Act,
and/of continuing appropriations, AND/OR [N MULTI-YEAR OBLIGATIONAL
AUTHORITIES ISSUED BY THE DEPARTMENT OF BUDGET AND MANAGEMENT,
BASED ON THE MEDIUM-TERM PUBLIC INVESTMENT PROGRAM OF THE
GOVERNMENT APPROVED BY THE NATIONAL ECONOMIC AND DEVELOPMENT
AUTHORITY. in the CASE OF National Government Agencies; the Corporate Budget for the
contract approved by the govcming Boards, pursuant to E.O. No. 518, series of 1979, in the case
of Government Financial Institutions and State Universities and Colleges; and the Budget for the
contract approved by the respective Sanggunian, in the case of Local Government Units."
SECTION 2. A NEW "SECTION 7" IS HEREBY PROVIDED AS FOLLOWS:

"SEC1'ION 7. MULTI-YEAR CONTRACTS, IN THE CASE OF A

MAJOR PROJECT OF A NATIONAL GOVERNMENT AGENCY,
WHICH WILL TAKE MORE THAN ONE YEAR TO IMPLEMENT,
THE PROCURING ENTlTY MAY PROCURE. IN ACCORDANCE
WITH THE PROVISIONS OF THIS ACT, A SINGLE MULTI-YEAR
CONTRACT COVERING THE ENTIRE SCOPE OF WORK OF THE
PROJECT OR A USABLE PORTION THEREOF UP TO ITS
COMPLETION, UNDER TilE FOLLOWING CONDITIONS:

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(A)
THE ABC SHALL COVER THE TOTAL COST OF THE
ENTIRE MULTI-YEAR CONTRACT UP TO THE COMPLETION OF
THE PROJECT OR A USABLE PORTION THEREOF.

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(B)
AS A PREREQUISITE TO THE AWARD OF THE CONTRACT,
THE PROCURING ENTITY MUST HAVE A MULTI-YEAR
OBLIGATIONAL AUTHORTITY, ISSUED BY THE DEPARTMENT
OF BUDGET AND MANAGEMENT, WHICH SHALL AUTHORIZE
THE PROCURING ENTITY TO ENTER INTO A MULTI YEAR
CONTRACT FOR THE PROJECT OR A USABLE PORTION
THEREOF, AND WHICH SHALL CERTIFY THAT THE FUNDS TO
COVER THE TOTAL MULTI-YEAR CONTRACT COST SHALL BE
INCLUDED IN THE ANNUAL BUDGET PROPOSALS OF THE ENDUSER AGENCY OR PROCURING ENTITY, WITHIN ITS BUDGET
CEILINGS, SUBJECT TO APPROVAL BY CONGRESS OF THE
APPROPRIATION OF THE FUNDS FOR Tim PROJECT THROUGH
THE GENERAL APPROPRIATIONS ACT"
SECTION 3. A NEW "SECTION 8" IS HEREBY PROVIDED AS FOLLOWS

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"SfX'TION 8. VAI,UE E'NGINE'E1UNa. FOR MAJOR

INFRASTRUCTURE PROJECTS, IN TERMS OF SIZE AND
COMPLEXITY, AS SPECIFIED BY THE HEAD OF THE
PROCURING ENTITY, VALUE ENGINEERING SHALL BE
CONDUCTED ACCORDING TO ACCEPTED STANDARDS AND
PRACTICES. VALUE ENGINEERING IS A SYSTEMATIC PROCESS
OF REVIEWING AND ASSESSING A PROJECT, DURING THE
PLANNING, DEVELOPMENT, AND DESIGN PHASES, IN ORDER
TO:

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(A)

(13)

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ANAL YZE ALTERNATIVE SCHEMES OF ACHIEVING THE

PROJECT OBJECTIVES IN ORDER TO DELETE OR REDUCE NONESSENTIAL FEATURES, AND TO LESSEN THE LIFE CYCLE
COSTS OF THE PROJECT;
IMPROVE THE VALUE AND QUALITY OF THE PROJECT;
AND

(C)

REDUCE THE TIME TO COMPLETE THE PROJECT."

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SECTION 4. SECTIONS 7 TO 78 OF TilE ACT ARE HEREBY RENUMBERED TO

SECTIONS 9 TO 80, RESPECTIVELY

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SECTION 5. SF2PARABILITY CLAUSF:. IF ANY PROVISION OF THIS ACT IS

DECLARED UNCONSITUTIONAL OR INVALlD, OTHER PARTS OR PROVISIONS
HEREOF SHALL CONTINUE TO BE IN FUL FORCE AND EFFECT.

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SECTION 6. REPE:ALlNG CLAlJSE:. ALL LAWS, DECREES, EXECUTIVE

ORDERS, RULES AND REGULATIONS, OR PARTS THEREOF, INCONSISTENT WITH
THE PROVISIONS OF TIllS ACT ARE HEREBY REPEALED OR MODIFIED
ACCORDINGLY.

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SECTION 7. EFFECI'IVITY CIJAUSE. THIS ACT SHALL TAKE EFFECT

IMMEDIATELY AFTER ITS PUBLICATION IN THE OFFICIAL GAZETTE OR IN AT
LEAST TWO (2) NEWSPAPERS OF GENERAL CIRCULATION.

Approved,