Government Bidding in the Philippines: An Overview of the Legal Framework

Flood control and other major infrastructure projects frequently make headlines. For the public, one recurring question is: How are these large-scale projects awarded?

The process is governed primarily by Republic Act No. 9184, or the Government Procurement Reform Act, together with its Implementing Rules and Regulations (IRR). More recently, Revenue Regulations (RR) No. 17-2024 introduced additional safeguards on the tax compliance of government contractors.

This article provides a structured overview of how public bidding works in the Philippines, the legal principles behind it, and recent regulatory developments.

The Rationale for Competitive Bidding

Government spending represents the use of taxpayer funds. To ensure accountability, efficiency, and fairness, RA 9184 established a uniform procurement system that replaced the previously fragmented rules applied across agencies.

The law is guided by four fundamental principles:

• Transparency – All procurement opportunities must be publicly advertised.

• Competitiveness – Qualified suppliers and contractors must be given a fair chance to participate.

• Accountability – Decisions of the procuring entity must be properly documented and justifiable.

• Efficiency – Procurement must be completed within reasonable timelines to serve the public interest.

The Stages of Public Bidding

The procurement cycle under RA 9184 generally proceeds as follows:

1. Advertisement of the Invitation to Bid

   • Procuring entities publish opportunities on the Philippine Government Electronic Procurement System (PhilGEPS), the agency’s website, and in certain cases, in newspapers.

   • The notice includes the project scope, Approved Budget for the Contract (ABC), and submission deadlines.

     
     

2. Pre-Bid Conference

   • For projects above a certain threshold, a conference may be held to clarify technical requirements and respond to questions from prospective bidders.

     
     

3. Submission of Bids

   • Bidders submit two sealed envelopes: one containing eligibility and technical requirements, and another containing the financial proposal.

     
     

4. Opening of Bids

   • The Bids and Awards Committee (BAC) publicly opens the submissions at a scheduled date and time, in the presence of observers.

     
     

5. Bid Evaluation and Post-Qualification

   • The Lowest Calculated Bid is identified.

   • The BAC then conducts post-qualification to verify the bidder’s compliance with legal, financial, and technical requirements. The award is given only to the Lowest Calculated Responsive Bid (LCRB).

   
   

6. Notice of Award and Contract Signing

   • The winning bidder receives a Notice of Award. After complying with documentary and performance security requirements, the contract is signed and a Notice to Proceed is issued.

   
   
   
   

Tax Compliance and RR 17-2024

In September 2024, the Bureau of Internal Revenue (BIR) issued RR 17-2024, which strengthened tax compliance requirements in government procurement.

• Contractors are now required to present an updated tax clearance from the BIR covering income tax, value-added tax, and business taxes.

• The clearance must be secured before the release of final payment or retention money.

• If a contractor has outstanding tax obligations, the government may:

  • Suspend payment until compliance is achieved; or

  • Apply a tax lien over retained amounts to cover unpaid obligations.

This regulation complements RA 9184 by ensuring that contractors who benefit from public contracts also meet their tax responsibilities.

Implications for Citizens

For taxpayers, understanding the procurement framework is essential:

• It provides assurance that projects are awarded through a competitive and transparent process.

• It highlights safeguards not only at the bidding stage but also at the payment stage, through RR 17-2024.

• It empowers citizens to make use of public platforms such as PhilGEPS to monitor procurement activities.

Legal Insight

RA 9184 created a standardized, transparent, and competitive framework for government procurement. With the introduction of RR 17-2024, tax compliance has become a mandatory element of the process, strengthening accountability in the use of public funds. Together, these measures aim to safeguard the integrity of government projects and protect taxpayers.

👉 Next in this series: From Budget to Bulldozers: The Journey of a Flood Control Project