Foreign participation in government procurement

Foreign participation in government procurement | Daily Tribune

Foreign contractors are known to be capable of undertaking large projects with the application of the newest and most advanced technologies. Relatively, our 1987 Constitution constantly promotes a self-reliant and independent national economy, while at the same time fostering the entry of foreign investment, goods, and services intended for our economic development. The Constitution adheres to a reciprocal trade based on equality and reciprocity, frowning only upon unfair foreign competition.

As decided in the 2020 landmark case of Philippine Contractors Accreditation Board v. Manila Water Co., Inc., (G.R. No. 217590), a foreign contractor can now apply for a regular license like Filipinos. In effect, a 100 percent foreign-owned domestic company can secure a regular license and participate in the bidding unless the project requires a certain degree of Filipino ownership. Stated otherwise, as long as the foreign firm renews its regular license annually and it remains valid without suspension, cancellation, or revocation for valid reasons, the firm can constantly work on construction projects within the field and scope of his license classification.

i. When goods are not available from local suppliers

If the government determines that no local supplier can supply the required goods, it may invite foreign suppliers, manufacturers, and/or distributors to participate in the bidding process, even before the advertisement for their procurement. The bidding requirements and conditions, as advertised, shall not be altered or changed for the purpose of inviting foreign contractors.

The head of the procuring entity must certify that local suppliers cannot provide the goods sought for procurement, even after conducting diligent market research, or that no local supplier is interested in participating in the procurement process. In addition, the procuring entity shall secure a certification from the appropriate government agency, such as the Bureau of Product Standards of the Department of Trade and Industry for electrical products, mechanical/building and construction materials, chemicals, foods, and other consumer products, and the Bureau of Food and Drugs of the Department of Health for drugs, medicine, and other related medical devices that based on its available records, the goods sought to be procured are not available from local suppliers.

ii. When there is a need to prevent situations that defeat competition or restrain trade

In a situation where the procuring entity intends to procure goods from an exclusive local manufacturer, supplier, distributor, or dealer that does not have subdealers selling at lower prices and for which no suitable substitute can be obtained at more advantageous terms to the government, the Bids and Awards Committee may recommend to the head of the procuring entity an invitation to foreign manufacturers to submit a manifestation of its intention to participate by posting through the website of the procuring entity, if any, and in the Philippine Government Electronic Procurement System (PhilGEPS).

The Philippine government may also extend an invitation to foreign contractors to submit bids if their country of origin grants reciprocal rights to Filipino citizens, irrespective of the availability of goods from local suppliers.

The Philippines and the foreign state may likewise enter into a treaty or executive agreement that invites the foreign contractors to submit bids. Any treaty, international or executive agreement to which the Philippines is a signatory affecting the subject matter, the RA 9184 or the NGPA and its IRR shall be observed.

For more of Dean Nilo Divina’s legal tidbits, please visit www.divinalaw.com. For comments and questions, please send an email to cad@divinalaw.com.