50% largest single contract

requirement
Philippine Government Procurement :: RA 9184 Revised Implementing Rules
and Regulations :: Topics on the Draft GPRA IRR
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50% largest single contract requirement

by shobe on Wed Mar 18, 2009 1:24 pm

I hope the engineers can help me with this.

Is it highly impossible for the GPPB to apply the exceptions

provided under Section 23.11.1.2 for infrastructure
projects as well? I have heard time and again that local
contractors find it difficult to join locally funded projects
with ABCs worth billions of pesos simply because of the
50% largest single contract requirement. Or will applying
the same exceptions for infra be too dangerous?

Please enlighten me with your thoughts on this. Thank you.

shobe
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Re: 50% largest single contract requirement

by engrjhez on Wed Mar 18, 2009 7:28 pm
shobe wrote:
I hope the engineers can help me with this.

Is it highly impossible for the GPPB to apply the exceptions

provided under Section 23.11.1.2 for infrastructure projects as
well? I have heard time and again that local contractors find it
difficult to join locally funded projects with ABCs worth billions
of pesos simply because of the 50% largest single contract
requirement. Or will applying the same exceptions for infra be
too dangerous?

Please enlighten me with your thoughts on this. Thank you.

Please enlighten us also on the comparison you are trying
to establish. Are we comparing goods/services to infra?
Because Section 23.11.1.2 is already all about infra:

The value of the prospective bidders largest single

completed contract, adjusted to current prices using
the National Statistics Office consumer price indices
available at the G-EPS website, and similar to the
contract to be bid, must be at least fifty percent
(50%) of the approved budget for the contract to be
bid: Provided, however, That in the case of a
contractor under Small A and Small B categories
without similar experience on the contract to be bid,
he may be allowed to bid if the cost of such contract
is not more than fifty percent (50%) of the
Allowable Ranges Contract Cost (ARCC) of his
registration. For this purpose, the classification of
contractors vis--vis the ARCC shall be based on the
Guidelines as prescribed by the Philippine
Contractors Accreditation Board (PCAB).

The difficulty of adhering to the requirements may be

solved by dividing the billion worth project into several
million worth-phases (of course all must be under
competitive bidding). A good procurement planning should
be make the process smoother.

engrjhez
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Re: 50% largest single contract requirement

by shobe on Thu Mar 19, 2009 2:07 pm

No, i am obviously not trying to compare goods with infra

procurement. What I'm driving at is the possibility of
applying the exceptions laid down in GPPB Resolution 07-
2006 to infrastructure projects.

To date, no single Filipino contractor can enter a multi-

billion locally funded project (if my sources are correct)
because of 50% largest single contract requirement under
the procurement rules. It is for this reason that i am
inquiring as to the possibility of coming up with exceptions
similar with the goods procurement.

shobe
Active Poster

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Occupation/Designation : Lawyer
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Re: 50% largest single contract requirement

by RDV @ GP3i on Thu Mar 19, 2009 2:48 pm

shobe wrote:No, i am obviously not trying to compare goods

with infra procurement. What I'm driving at is the possibility of
applying the exceptions laid down in GPPB Resolution 07-2006
to infrastructure projects.

Shobe, what will you say if I inform you that in the draft
IRR the 50% Single Largest Contract is even proposed to
be increased to 70%? Sec. 23.6.2 of the draft IRR is partly
quoted as follows:

"3. To be considered eligible and qualified to bid for a

contract, a prospective bidder must have the following:

a) successful experience as contractor in the completed

construction, in the last five (5) years, of at least one (1)
work of a nature and complexity similar to the works under
the contract to be bid. To comply with this
requirement, the cost of the completed single works cited
should be at least seventy percent (70%) of the Approved
Budget for the Contract/Estimated Contract Cost of works
under bidding, adjusted to current prices using the
National Statistics Office consumer price indices available
at its website, such being verifiable from the completion
certificates; and
b) an annual turnover from all works averaged over the
last three (3) years equal to one hundred percent (100%)
of the Approved Budget for the Contract/Estimated
Contract Cost.

Contractors under Small A and Small B categories without

similar experience on the contract to be bid may be
allowed to bid if the cost of such contract is not more than
fifty percent (50%) of the Allowable Range of Contract
Cost (ARCC) of his registration. For this purpose, the
classification of contractors vis--vis the ARCC shall be
based on the Guidelines as prescribed by the PCAB.

For the procurement of infrastructure projects, a contract

shall be considered similar to the contract to be bid if it
has the same major categories of work. "

I think, your proposal to apply the same exception laid

down in that GPPB Resolution for goods has been proposed
also during the different consultation meetings conducted
by the GPPB-TSO.

I suggest you post your proposal in the Comments on the

draft IRR, so that GPPB-TSO can include it for consideration
as it is now in the process of rewriting the draft IRR. I have
also posted my own comments/questions there on the
same eligibility requirements for infra.

shobe wrote:To date, no single Filipino contractor can enter a

multi-billion locally funded project (if my sources are correct)
because of 50% largest single contract requirement under the
procurement rules. It is for this reason that i am inquiring as to
 the possibility of coming up with exceptions similar with the
goods procurement.
The contractors can always enter into JVAs if alone they
would not be able to qualify for multi-billion projects.

RDV @ GP3i
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Re: 50% largest single contract requirement

by shobe on Thu Mar 19, 2009 3:11 pm

Thanks for the info Sir RDV. I think increasing the

requirement from 50% to 70% sounds problematic to
me.
 shobe
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Number of posts : 79
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Re: 50% largest single contract requirement

by RDV @ GP3i on Thu Mar 19, 2009 3:20 pm

You are probably right.

This is comments to the draft IRR na pala.

See my comments also on the eligibility requirements

based on experience. It would be more difficult for the
small contractors to participate.

RDV @ GP3i
 Grand Master

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Re: 50% largest single contract requirement

by shobe on Thu Mar 19, 2009 3:31 pm

As for the suggestion to form JVs, please correct me if i'm

wrong, but one party in the Joint Venture needs to comply
with the single largest contract requirement, right? So no
Filipino contractor, without a foreign partner would then
still be able to join a multi-billion locally funded contract?

shobe
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Re: 50% largest single contract requirement

by RDV @ GP3i on Thu Mar 19, 2009 3:47 pm

shobe wrote:As for the suggestion to form JVs, please correct

me if i'm wrong, but one party in the Joint Venture needs to
comply with the single largest contract requirement, right? So
no Filipino contractor, without a foreign partner would then still
be able to join a multi-billion locally funded contract?

You are right, at least one member of the JV should be able

to comply with that experience requirement.

I think naman, most, if not all, multi-billion infrastructure

contracts are foreign-assisted and not locally-funded.
However, there are Filipino contractors who have qualified
although they are not many.

RDV @ GP3i
Grand Master

Number of posts : 1611

Company/Agency : DBM-Reg'l Office IV-B
 Occupation/Designation : Regional Director/ Procurement Trainer
Registration date : 2008-09-04

Re: 50% largest single contract requirement

by riddler on Sun Mar 22, 2009 4:42 pm

Let me share my thoughts shobe,

shobe wrote:
I hope the engineers can help me with this.

Is it highly impossible for the GPPB to apply the exceptions

provided under Section 23.11.1.2 for infrastructure projects as
well? I have heard time and again that local contractors find it
difficult to join locally funded projects with ABCs worth billions
of pesos simply because of the 50% largest single contract
requirement. Or will applying the same exceptions for infra be
too dangerous?

The Single Largest Contract Similar to the project

requirement is related to the Construction Industry
Authority of the Philippines (CIAP) through Philippine
Contractors Board Resolution (PCAB)
001 SERIES OF 2004 which provides for Allowable Range of
Contract Cost (ARCC) any Contractor (under its License)
can be allowed to bid to a particular infrastructure project.
CIAP through the PCAB which is under the supervision of
the Department of Trade and Industry (DTI) recommends
for accreditation of new application, and upgrading of
Contractors License based on their assets and liabilities,
capability, experience, and capacity set forth under RA
4566.

The 50% of the ABC Single Largest Contract similar to the

project requirement is made to ensure that the
participating foreign or Filipino contractors have the
experience to have constructed the project which is similar
in nature.

Yes, I believed so that applying the same exception (as

you mentioned) to Infra maybe dangerous, because if
these contractor/s are allowed to participate in the bidding
yet, they do not have the experience though they are
awashed with capital to finance the project, it may
compromise the project due to their inexperience to
manage it. The above requirement is a safety net for the
Procuring Entity.

But I am not in favor of increasing the 50% Single

Largest Project (SLP) requirement as discussed by
RDV, This is too restrictive, many Filipino contractors
will be displaced. I hope the GPPB will not pursue the
matter.

riddler
Board General
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Re: 50% largest single contract requirement

by riddler on Mon Mar 23, 2009 10:16 am

engrjhez wrote

....the value of the prospective bidders largest single

completed contract, adjusted to current prices using
the National Statistics Office consumer price indices
available at the G-EPS website, and similar to the
contract to be bid,.....

engrjhez,

I have tried to contact the NSO and G-EPS websites with

regards to adjustments of a certain Single Largest Project (
say 10 million completed in year 2004) to the current price
or value, but nada! I got lost in the dark of their web. Ha
ha Ha.. I hope I can find a simple formula from their end.

you also said that,

 ...The difficulty of adhering to the requirements may
be solved by dividing the billion worth project into
several million worth-phases (of course all must be
under competitive bidding). A good procurement
planning should be make the process smoother.

I am afraid, that these may result to splitting of the project

engrjhez. Program holders should be careful in doing this.
Certain projects are approved by congress into a "single
appropriation". Dividing this into different parts maybe
difficult for the program holders to make. Questions maybe
difficult to answer later on, especially pag may inquiry sa
congress.

riddler
Board General

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Company/Agency : lgu
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Re: 50% largest single contract requirement

by engrjhez on Tue Mar 24, 2009 1:47 pm

Engr. Ruel,

Splitting of contracts is defined in Sec.54.1 of the IRR:

"...Splitting of Government Contracts means the division or
breaking up of Government Contracts into smaller
quantities and amounts, or dividing contract
implementation into artificial phases or sub-contracts for
the purpose of evading or circumventing the requirements
of law and this IRR-A, especially the necessity of public
bidding ... x x x"

In my opinion, dividing the contracts into phases cannot be

artificial if we are looking to a "reasonable cause" posed by
the statistical impossibility of contractors able to join the
bidding. We are not actually circumventing the law, but we
are opening the way for a more competitive bidding
process.

Most important, we are not splitting the contract to avoid

bidding - and we believe that by doing so, every part of it
still has to and must comply with the process.

engrjhez
Grand Master

Number of posts : 2477

Age : 38
Company/Agency : City Government of Bacoor [Region IV-A, Province of Cavite]
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Trainer - PhilGEPS
Registration date : 2008-10-31


Re: 50% largest single contract requirement

by shobe on Tue Mar 24, 2009 3:26 pm

I have tried to contact the NSO and G-EPS websites with

regards to adjustments of a certain Single Largest Project ( say
10 million completed in year 2004) to the current price or
value, but nada! I got lost in the dark of their web. Ha ha Ha.. I
hope I can find a simple formula from their end---ruel

I got this from one of the best engineers in NEDA, hope

this helps.

The adjusted contract price may be computed using

the following formula:
Adjusted Contract Price (ACP) = (CPI Current Year /
CPI Given Year) x (Project Cost)

Last edited by shobe on Tue Mar 24, 2009 4:40 pm; edited 1 time in total
 shobe
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Company/Agency : Makati Firm
Occupation/Designation : Lawyer
Registration date : 2008-09-08

Re: 50% largest single contract requirement

by riddler on Tue Mar 24, 2009 4:32 pm
shobe wrote:
I have tried to contact the NSO and G-EPS websites with
regards to adjustments of a certain Single Largest Project ( say
10 million completed in year 2004) to the current price or
value, but nada! I got lost in the dark of their web. Ha ha Ha.. I
hope I can find a simple formula from their end---ruel

I got this from one of the best engineers in NEDA, hope this
helps.
 The adjusted contract price may be computed using the
following formula:

Adjusted Contract Price = ( CPI Current Year ) X (Project

Cost)
CPI Given Year

haha ha. Now its simple atty.. but wait, one more spoon
feed for me, please.

How can I get that CPI data?

riddler
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Re: 50% largest single contract requirement

by RDV @ GP3i on Tue Mar 24, 2009 4:37 pm
 Engr. ruel:

You get the CPI (Consumer Price Index) data from the
NSO. ciao.

RDV @ GP3i
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Re: 50% largest single contract requirement

by riddler on Tue Mar 24, 2009 8:39 pm

RDV wrote:Engr. ruel:

You get the CPI (Consumer Price Index) data from the NSO.
ciao.
 ok. now I get it. i'll try to navigate again to their web.
Thanks RDV!

riddler
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Company/Agency : lgu
Occupation/Designation : endyeenel
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Re: 50% largest single contract requirement

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Allowable Range in Contract Cost

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 Forum Forums PCAB Licensing questions, discussions & suggestions Allowable Range in
Contract Cost

This topic contains 16 replies, has 5 voices, and was last updated by pcametro 2 years, 3
months ago.

Viewing 10 posts - 1 through 10 (of 17 total)

12

Author
Posts
September 26, 2014 at 8:18 am#55

raieezhen
Participant
My companys renewed license is with Category C and Size Range of Small A. Under the
Categorization Classification Table it is only presented that Category C is with a Size Range of
Small B. What then will be the ARCC for our license?
September 26, 2014 at 4:12 pm#473

pcametro
Participant
The size rage is not only based on Category but also on SLP (Single Largest Project) registered
with PCAB. Category C would qualify for Small B but if you do not have a SLP that qualifies for
Small B, you will be classified as Small A.
September 27, 2014 at 1:22 am#474

raieezhen
Participant
For Small A the SLP is lesser or equivalent to 500T. During our renewal we presented projects
we have undertaken up to 10M. We inquired from PCAB why the size range was Small A but
they only informed us that it will be considered on the next renewal. This affected our eligibility in
joining Government projects even if we have experiences and NFCC more than the ABC. Is it
really the size range will be the only basis for ARCC and the Category will not be of any
consideration?
September 27, 2014 at 4:07 am#475

pcametro
Participant
Please remember that we are dealing with two different laws RA 4566 (the Contractors
License Law) and RA 9184 (the Government Procurement Reform Act) each with its specific
criteria based on its scope of operation. Category C is a Category under RA 4566 and Small A is
a size range under RA 9184. Category is only of consideration if you qualify via your SLP.
As you have obviously not provided the full picture in your query we make a few assumptions
(based on reasonable deductions as we know that PCAB will properly apply the law(s) and
regulations) in our explanation below:
1. You have recently renewed your PCAB license (expiry date every 30 June)
2. Your ARCC Registration is still valid (3 year renewal cycle) and was not up for renewal as yet
3. The only application submitted to PCAB was license renewal under RA 4566.
Consequently the response of PCAB (that it will be considered on the next renewal) is entirely
correct and specifically aimed at your ARCC Registration renewal which is not yet due.
September 27, 2014 at 6:33 am#476

raieezhen
Participant
Thank you for your clarification PCAMETRO on this matter.
October 13, 2014 at 10:29 pm#482

allan_roldan
Participant
Hi. May I ask how much is the ceiling amount of project for a new license with category A, small
B classification, without experience. thank you.
October 15, 2014 at 3:13 am#484

pcametro
Participant
The IRR under RA 9184 provides as follows:
23.5.2.5. The prospective bidder must have an experience of having completed, within a period
of ten (10) years from the date of submission and receipt of bids, at least one (1) contract that is
similar to the contract to be bid, and whose value, adjusted to current prices using the NSO
consumer price indices, must be at least fifty percent (50%) of the ABC to be bid:
Provided, however, That contractors under Small A and Small B categories without similar
experience on the contract to be bid may be allowed to bid if the cost of such contract is not
more than fifty percent (50%) of the Allowable Range of Contract Cost (ARCC) of their
registration based on the guidelines as prescribed by the PCAB.
October 18, 2014 at 3:41 am#488

shannchan
Participant
Hi pcametro, are there several versions of the Revised IRR of RA9184? Because the copy I
downloaded did not mention the period of ten (10) years. Thanks
October 19, 2014 at 7:11 am#489

pcametro
Participant
There are continuous changes to the IRR by the GPPB. Not easy to keep up with them
especially if not annotated. The above provision is contained in the original IRR by the GPPB as
approved by resolution (2009) of the various agencies. We however note that there is a differing
version currently in the GPPB site (including update annotations) and which does not include
the period of 10 years. There is no annotation of amendment and it could be an omission.
However, the presumption is that the official publication is correct.
November 18, 2014 at 2:44 am#496
 secre
Participant
sir, may we request clarification on the purpose of putting the notation in the PCAB issued
contractors license stating therein above project kinds and size ranges are based on board
resolution no. 001, s. 2004.. thank u very much

Allowable Range in Contract Cost

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Forum Forums PCAB Licensing questions, discussions & suggestions Allowable Range in
Contract Cost

This topic contains 16 replies, has 5 voices, and was last updated by pcametro 2 years, 3
months ago.

Viewing 7 posts - 11 through 17 (of 17 total)

12

Author
Posts
November 18, 2014 at 10:41 am#497

pcametro
Participant
It is the original Board Resolution dealing with the ARCC and sets out categorization and
classification information over and above the size ranges hence the notation. The size ranges
are currently dealt with by Circular No. 001 series of 2009 (2nd Stage)
http://pcametro.ph/pcab/wp-content/uploads/2012/06/Allowable-Ranges-of-Contract-Costs-
2ndstage_arcc.pdf.
November 26, 2014 at 7:23 am#498

secre
Participant
hi pcametro.may we ask clarification on the logic why we are still using the second stage of
ARCC which covers CFYs 2006-2007 b& 2007-2008 instead of the third stage covering CFY
2008-2009 & 2009-2010 which is way way beyond 2014. are we supposed to wait for the
issuance of a PCAB circular before using said third stage of adjustment? thank u very much
November 26, 2014 at 9:27 am#499

pcametro
Participant
The Second Stage Adjustment was approved by PCAB Circular No. 01 series of 2009. The
Third Stage Adjustment has nor as yet been approved. As to the reason why not, we do not
wish to speculate. However, in discussions at the end of 2012 concerns in respect of the
minimum net worth required per license category were raised as, for example, a Category D
(Medium A) contractor could be awarded numerous contracts of up to Php15M whilst only
having a net worth of Php900K. This was part of the discussion (though not specifically
highlighted) we reported on in the the following article: http://pcametro.ph/blog/contractors-not-
ready-for-afta/. From what we gather, there is no immediate plan approve the Third Stage
Adjustment.
December 9, 2014 at 8:12 am#501

secre
Participant
hi pcametro.happy holidays.. we are still in quandary regarding pcab board resolution no. 001
series of 2004 and pcab circular no. 001 s. of 2009. this office had automatically used the third
stage of adjustments starting CY 2008 to present since there was no suspension order holding
in abeyance the implementation of the third stage of adjustment. how can we bridge the
inconsistency in the application of the stages of adjustment when we have already implemented
the ARCC as per period of coverage of pcab board resolution no. 001 s. 2004. The issuance of
circular 001 s. 2009 was rather late since effectivity of the same was on July 2009, which was
already the second year of implementation for the third stage. We simply can not just say to the
bidders that we will go back to the second stage of adjustment without showing any document
to that effect. Our other concern is the notation in the pcab license stating therein that above
project kinds and size ranges are based on board resolution no. 001, s. 2004. Whats the logic
of putting the notation if we are to use PCAB circular no. 01, s. 2009 or wont it be more
understandable if the notation talks about pcab circular no. 01, s. 2009 instead so that the arcc
reflected therein will just be second stage of adjustment. is there a violation if we still used the
third stage of adjustment up to now? sir/mam, we hope to see light regarding our query. thank
you very much.
December 14, 2014 at 5:47 pm#502

pcametro
Participant
PCAB Provided us with the following response:
PCAB suspended the implementation of stage 3 of the adjustment of size range. It would take
a board resolution lifting the suspension which should be published in a newspaper of general
circulation. This is made clear in all AMO seminars.
Stage 3 may not be even implemented at all because the minimum equity of each category is
due for adjustment. (The allowable range of contract is related to equity.)
As to the notation, it was written there because during the transition from stage 1 to 2, a Medium
A, for example, issued in stage 1 will have a track record based on stage 1 but the registrations
validity may extend up to stage 2. This is to apprise user of the difference. A Medium A issued in
stage 2 does not have the notation.
When BR 001 s. 2004 was issued each adjustment stage was linked to an increase in minimum
equity required per Category. The increased equity was not implemented and accordingly the
adjustment stages could not be implemented in accordance with the provisions of BR 001 s.
2004. This Board Resolution is now moot and academic.
December 15, 2014 at 3:54 am#504

secre
Participant
gud am pcametrothanks for the response to our query. We would just want to point out that
how cud we say that BR 001-2004 is now moot and academic when even pcab licenses issued
CY 2013 and 2014 still have the notation in the said licenses. May we ask if the suspension was
issued through a board resolution or though a circular and may we know where to download the
said suspension for the implementation of stage three of the adjustment of size ranges so that
we will be guided accordingly. Thanks a lot
December 15, 2014 at 6:52 am#505

pcametro
Participant
PCAB Circular 01 series of 2009 superseded BR 001-2004. You cannot look at Board
Resolutions in isolation. BR 001-2004 was issued as part of a broader upgrading of contracting
capability policy of CIAP/PCAB in terms of which the net equity per License Category will be
increased coinciding with the size range adjustment stages. The increase of net equity per
License Category was approved by PCAB BR No. 949 series of 2003, pursuant to CIAP BR No.
9 series of 2003. However, only stage one of the increase of net equity per License Category
was implemented. This effectively halted the further implementation of the further stages.
Through PCAB Circular 01 series of 2009 the second stage adjustment was implemented.
There has been no further implementation. The PCAB Categorization-Classification Table
reflects the current position (downloadable from http://pcametro.ph/pcab/pcab-license-form/). In
addition, BR 001-2004 stipulates as follows: the Board RESOLVES to provide for a 2-year
implementation period. Each stage had to be separately implemented. This, other than by
PCAB Circular 01 series of 2009, never occurred.

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