Chapter 4 - Procurement Part 2

Prepared by:
Matt Andrew C. Bagon

7 STEPS THAT LEAD TO A SUCCESSFUL
PROCUREMENT PROCESS

1. Conduct an Internal Needs Analysis
2. Conduct an assessment of the supplier’s market
3. Collect supplier information
4. Develop a sourcing/outsourcing strategy
5. Implement the sourcing strategy
6. Negotiate with supplier and select the winning bid
7. Implement a transition plan or contractual supply
chain improvements

USER BUY

 The simplest approach to procurement is to allow
users in the organization to determine their own
purchase needs, evaluate sources of supply, and
execute the purchasing process.
VOLUME CONSOLIDATION

 A procurement strategy accomplished through
reduction in the number of suppliers.
SUPPLIER OPERATIONAL INTEGRATION

 It occurs when buyers and sellers begin to integrate
their processes and activities in attempt to achieve
substantial performance improvement.
VALUE MANAGEMENT

 More intense aspect of supplier integration, going
beyond a focus on buyer-seller operations to a more
comprehensive and sustainable relationship.
PROCUREMENT STRATEGY PORTFOLIO
 PARETO EFFECT - a small number of categories

represent the majority of the total spend and a small
number of suppliers cause a disproportionate
number of the problems.
ROUTINE PURCHASES

 Those items that involve a low percentage of a firm’s
totally spend and involve very little supply risk.
BOTTLENECK PURCHASES

 Items are frequently only available from a small
number of alternative suppliers.
LEVERAGE PURCHASES

 It involves little supply risk. The items are generally
commodities where many alternative sources of
supply exist.
CRITICAL PURCHASES

 Strategic items and services that involve a high level
of expenditure and are vital to the organization’s
success.

PROCUREMENT STANDARD
GENERAL RULE : Sec. 10


All procurement shall be done through competitive bidding,
except as provided in Rule XVI of the IRR.
EXCEPTION
Alternative methods shall be resorted only:
 In highly exceptional case
 To promote economy and efficiency
 Justified by the conditions specified in IRR
 Prior approval of the HOPE
 GPPB approval as required under EO 423, S. 2005 (as
amended)
 Most advantageous price for the Government
ALTERNATIVE METHODS

1. Limited Source Bidding
2. Direct Contracting
3. Repeat Order
4. Shopping
5. Negotiated Procurement
LIMITED SOURCE BIDDING
(Sec. 49)
APPLICABILITY:
Goods

Consulting services
CONDITIONS:
Highly specialized types where only a few bidders are known
to be available
Major plant components beneficial to limit bidding to known
qualified bidders to maintain uniform quality and performance
of the plant
PRE-SELECTION PROCEDURES PER GPM
GPPB Resolution 06-2012

17
EXAMPLE OF

 In order to apply LSB on the procurement of motor vehicle, PE
should first establish that the motor vehicle sought to be procured
is either a highly specialized type of goods or a major plant
component; otherwise, Competitive Bidding shall apply. (NPM
63-2013)
 Catering Services does not involve highly specialized

requirements, and is undoubtedly not a major plant component.
Limited Source Bidding cannot be resorted to in the procurement
of Catering Services. Competitive Bidding should be resorted to
in the acquisition of the contemplated service. (NPM 61-2013)
18
DIRECT CONTRACTING

 Since there are other Passport Readers available in the
market apart from that manufactured by 3M Corporation,
Direct Contracting cannot be utilized for the acquisition
of brand new passport readers.
 Even though 3M Passport Reader is proprietary in nature

and can be obtained from the proprietary source, there
may be other Passport Readers in the market, which are
likewise proprietary in nature that can be obtained. (NPM
41-2013)
19
REPEAT ORDER

APPLICABILITY:
Goods
CONDITIONS:
1.Same or lower unit prices, provided that such prices are still the
most advantageous to the GOP after price verification
2.No splitting of contracts
3.Availed of within 6 months from the contract effectivity date
stated in the NTP arising from the original contract, except in cases
duly approved by the GPPB
4.Not to exceed 25% of the quantity of each item
5.Original contract awarded through competitive bidding
20
REPEAT ORDER

 Repeat Order under Section 51 of RA 9184 does not require
post-qualification.
 The phrase “ subject to post-qualification process described in

the Bidding Documents” , as stated in the provision refers to
Competitive Bidding and not to Repeat Order. (NPM 13-
2013)
21
SHOPPING

APPLICABILITY [52.1(A) AND (B)]:
Goods
CONDITIONS [SHOPPING UNDER §52.1(A)]:

1.There is an unforeseen contingency requiring immediate purchase
2.Amount does not exceed the threshold
CONDITIONS [SHOPPING UNDER §52.1(B)]:

1.Procurement of ordinary or regular office supplies and equipment not
available in PS-DBM
22
THRESHOLD FOR UNFORESEEN
CONTINGENCIES [S. 52.1(a)]
 NGAs, GOCCs, GFIs, SUCs – PhP100,000
 LGUs – 
Maximum Amount (in Philippine Pesos)
Classification
Province City Municipality
1st Class 100,000 100,000 50,000
2nd Class 100,000 100,000 50,000
3rd Class 100,000 80,000 50,000
4th Class 80,000 60,000 50,000
5th Class 60,000 50,000 50,000
6th Class 50,000 50,000 50,000
In the case of Barangays, the maximum amount is PhP50,000
23
NEGOTIATED PROCUREMENT
SMALL VALUE PROCUREMENT
APPLICABILITY 
All types of Procurement
CONDITIONS:
1.Procurement does not fall under Shopping [§52]
24
SHOPPING [S 52.1(b)] AND
SMALL VALUE PROCUREMENT

 NGAs, GOCCs, GFIs, SUCs – PhP500,000
 LGUs –
Maximum Amount (in Philippine Pesos)
Classification
Province City Municipality
1st Class 500,000 500,000 100,000
2nd Class 500,000 500,000 100,000
3rd Class 500,000 400,000 100,000
4th Class 400,000 300,000 50,000
5th Class 300,000 200,000 50,000
6th Class 200,000 100,000 50,000
In the case of Barangays, the maximum amount is PhP50,000
25
NFAs PROCUREMENT STRATEGY

HARVEST SEASON 2018 ADDITIONAL
VOLUME OF INCOME
PALAY WITH ADDT’L
PROCURED BSI
MARCH-MAY 18,160
OCT-DEC 831,831 P2,495,493.00

Chapter 4 - Procurement Part 2

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Chapter 4 - Procurement Part 2

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Prepared by:

Matt Andrew C. Bagon

 PARETO EFFECT - a small number of categories

GENERAL RULE : Sec. 10

 Catering Services does not involve highly specialized

 Even though 3M Passport Reader is proprietary in nature

 The phrase “ subject to post-qualification process described in

CONDITIONS [SHOPPING UNDER §52.1(A)]:

CONDITIONS [SHOPPING UNDER §52.1(B)]:

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