SANCTIONS AND

PENALTIES
GPPB
• Government Procurement Policy Board
• To protect national interest in all matters affecting public
procurement, having due regard to the country’s regional and
international obligations;
• To formulate and amend public procurement policies, rules and
regulations, and amend, whenever necessary, this IRR;
TSO
• Technical Support Office
• Research-based procurement policy recommendations and rule-
drafting;
• Development and updating of generic procurement manuals and
standard bidding forms;
• Management and conduct of training on procurement systems and
procedures;
• Evaluation of the effectiveness of the government procurement
system and recommendation of improvements in systems and
procedures;
• Monitoring the compliance to the Act and assisting Procuring Entities
improve their compliance;
• Monitoring the implementation and effectiveness of the PHILGEPS;
and
• Secretariat support
MEMBERSHIP
• Secretary of the Department of Budget and Management as Chairperson.
• Director-General of NEDA, as Alternate Chairperson
• with the following as Members; the Secretaries of the Departments of;
• Public Works and Highways
• Finance,
• Tradeand Industry,
• Health,
• National Defense,
• Education,
• Interior and Local Government,
• Science and Technology,
• Transportation,
• Information and Communications Technology,
• Energy,
• or their duly authorized representatives and a representative from the private sector to
be appointed by the President upon the recommendation of the GPPB.
The GPPB may invite representatives from the COA or from relevant Government agencies
and private sectors to serve as resource persons.
CONFLICT OF INTEREST
A bidder that has a conflict of interest shall be disqualified to
participate in the procurement athand. A Bidder would be
considered as having a conflict of interest with another bidder in
any of the events described in paragraphs 1 through 3 below
and a general conflict of interest in any of the circumstances set
out in paragraphs 4 through 11 below:
• If the bidder is a corporation or a partnership and it has
officers, directors, controlling shareholders, partners or
members in common with another bidder; or if the bidder is
an individual or a sole proprietorship and he is the proprietor
of another bidder, or an officer, director or a controlling
shareholder of another bidder; or if the bidder is a joint
venture and it or any of its members has officers, directors,
controlling shareholders or members in common with another
bidder, or any of its members is a bidder;
• A bidder receives or has received any direct or indirect subsidy
from another bidder;
• A bidder has the same legal representative as any other bidder
for purposes of the bidding at hand.
• A bidder has a relationship directly or through common third
parties, that puts them in a position to have access to
information about or influence on the bid of another bidder, or
influence the decisions of the Procuring Entity regarding the
bidding process. This will include a firm or an organization that
lends, or temporarily seconds, its personnel to firms or
organizations which are engaged in consulting services for the
preparation related to procurement for or implementation of
the project, if the personnel would be involved in any capacity
on the same project;
• A bidder submits more than one bid in the bidding process.
However, this does not limit the participation of
subcontractors in more than one bid;
• A bidder who participated as a consultant in the preparation
of the design or technical specifications of the goods and
related services that are the subject of the bid;
• A Bidder who participated as a consultant in the preparation
of the design or technical specifications of the Goods and
related services that are the subject of the bid; or
• A Bidder who lends, or temporarily seconds, its personnel to
firms or organizations which are engaged in consulting
services for the preparation related to procurement for or
implementation of the project, if the personnel would be
involved in any capacity on the same project;
• If a consultant combines the function of consulting with those
of contracting and/or supply of equipment;
• If a consultant is associated with, affiliated to, or owned by a
contractor or a manufacturing firm with departments or
design offices offering services as consultants unless such
consultant includes relevant information on such relationships
along with a statement in the technical proposal cover letter
to the effect that the consultant shall limit its role to that of a
consultant and disqualify itself and its associates from work in
any other capacity that may emerge from the project
(including bidding for any part of the future project). The
contract with the consultant selected to undertake the project
shall contain an appropriate provision to such effect; or
• If there is a conflict among consulting projects, the consultant
(including its personnel and subcontractors) and any
subsidiaries or entities controlled by such consultant shall not
be recruited for the relevant project. The duties of the
consultant depend on the circumstances of each case. While
continuity of consulting services may be appropriate in
particular situations where no conflict exists, a consultant
cannot be recruited to carry out a project that, by its nature,
shall result in conflict with a prior or current project of such
consultant
• In accordance with Section 47.1 of the 2016 IRR, the bidder
should not be related to the Head of the Procuring Entity, the
members of the BAC, the TWG and the BAC Secretariat, the
head of the PMO or end the end-user or implementing unit,
and the project consultants, by consanguinity or affinity up to
the third civil degree. Such relationship will automatically
disqualify the bidder from participating in the procurement of
contracts by the Procuring Entity notwithstanding the act of
the aforementioned persons inhibiting themselves from the
procurement process. This prohibition shall apply to the
following persons:
1. If the bidder is an individual or a sole proprietorship, to the bidder
himself;

2. If the bidder is a partnership, to all its officers and members;

3. If the bidder is a corporation, to all its officers, directors and

controlling stockholders;

4. If the bidder is a cooperative, to all its officers, directors and

controlling shareholders or members; and

5. If the bidder is a joint venture, items 1 through 4 above shall

correspondingly apply to each of the members of the said joint
venture, as may be appropriate.
• Does the term “prohibited relations” under Section 47.1 of
the IRR apply to subcontractors?
Penal Liabilities
and
Sanctions
Penal Liabilities of Public
Officers
• Without prejudice to the provisions of R.A. 3019 and other
penal laws, public officers who commit any of the following
acts shall be criminally liable:
• Opening any sealed Bid including but not limited to Bids that
may have been submitted through the electronic system and
any and all documents required to be sealed or divulging their
contents, prior to the appointed time for the public opening of
Bids or other documents.

• Delaying, without justifiable cause, the screening for eligibility,

opening of bids, evaluation and post evaluation of bids, and
awarding of contracts beyond the prescribed periods of action
provided for in the 2016 IRR.
• Unduly influencing or exerting undue pressure on any member
of the BAC or any officer or employee of the Procuring Entity
to take a particular action which favors, or tends to favor a
particular bidder.
• Splitting of contracts which exceed procedural purchase limits
to avoid competitive bidding or to circumvent the limits of
approving or procurement authority.
• Abuse by the Head of the Procuring Entity of his power to
reject any and all bids as mentioned under Section 41 of R.A.
9184 and its 2016 IRR, with manifest preference to any bidder
who is closely related to him in accordance with Section 47 of
R.A. 9184 and its 2016 IRR.
• When any of the foregoing acts is done in collusion with a
private individual, the private individual shall likewise be liable
for the offense.
Penal Sanctions for Public
Officers
• Without prejudice to the provisions of R.A. 3019 and other
penal laws, public officers who commit any of the above acts
shall, upon conviction, suffer the penalty of imprisonment of
not less than six (6) years and one (1) day, but not more than
fifteen (15) years. In addition, the public officer shall also
suffer the penalty of temporary disqualification from public
office, while any private individual found to have colluded with
him shall be permanently disqualified from transacting
business with the government.
• The above penalties and offenses shall cover all types of
procurement whether done manually or electronically. When
the bidder is a juridical entity, criminal liability and the
accessory penalties shall be imposed on its directors, officers
or employees who actually commit any of the foregoing acts.
If a person previously held liable or found guilty under the
provisions of R.A. 9184 and its 2016 IRR has a controlling
interest in a prospective bidder-entity, the said bidder-entity
shall be disqualified to participate in any procurement activity
being conducted by the Government.
Penal Liabilities of Private
Individuals
• Private individuals who commit any of the following acts, shall
be criminally liable:
• When two or more bidders agree and submit different bids as
bona fide bidders, all the while knowing that the bid(s) of one
or more of them was so much higher than the other that the
latter could not be honestly accepted and that the contract
will surely be awarded to the pre-arranged lowest bid.

• When a bidder maliciously submits different bids through two

or more persons, corporations, partnerships or any other
business entity in which he has an interest to create the
appearance of competition that does not in fact exist so as to
be adjudged as the winning bidder.
• When two or more bidders enter into an agreement which
calls upon one or more of them to refrain from bidding for
procurement contracts, or which requires one or more of
them to withdraw Bids already submitted, in order to secure
an undue advantage to any one of them.

• When a bidder, by himself or in connivance with others,

employs schemes which tend to restrain the natural rivalry of
the parties or operates to stifle or suppress competition and
thus produce a result disadvantageous to the public.
• Submitting eligibility requirements of whatever kind and
nature that contain false information or falsified documents
calculated to influence the outcome of the eligibility screening
process or conceal such information in the eligibility
requirements when the information will lead to a declaration
of ineligibility from participating in public bidding.

• Submitting Bidding Documents of whatever kind and nature

that contain false information or falsified documents or
conceal such information in the Bidding Documents, in order
to influence the outcome of the public bidding.
• Participating in a competitive bidding using the name of
another or allow another to use one’s name for the purpose of
participating in a public bidding.
• Withdrawing a Bid, after it shall have qualified as the Lowest
Calculated Bid/Highest Rated Bid, or refuse to accept an
award, without just cause or for the purpose of forcing the
Procuring Entity to award the contract to another bidder. This
shall include the non-submission within the prescribed time,
or delaying the submission of requirements such as, but not
limited to, performance security, preparatory to the final
award of the contract.
Penal Sanctions for Private
Individuals
• Private individuals who commit any of the above acts, and any
public officer conspiring with them shall, upon conviction,
suffer the penalty of imprisonment of not less than six (6)
years and one (1) day but not more than fifteen (15) years. In
addition, for any of the foregoing acts mentioned in Items 1
through 4, the public officer involved shall also suffer the
penalty of temporary or perpetual disqualification from public
office and the private individual shall be permanently
disqualified from transacting business with the Government.
Civil Liability in Case of
Conviction
• Without prejudice to administrative sanctions that may be
imposed in proper cases, a conviction under R.A. 9184 and its
2016 IRR or R.A. 3019 shall carry with it civil liability, which
may either consist of restitution for the damage done or the
forfeiture in favor of the government of any unwarranted
benefit derived from the act or acts in question or both, at the
discretion of the courts
Liquidated Damages
• All contracts executed in accordance with R.A. 9184 and its
2016 IRR shall contain a provision on liquidated damages
which shall be payable in case of breach thereof. For the
procurement of goods, infrastructure projects and consulting
services, the amount of the liquidated damages shall be at
least equal to one-tenth of one percent (0.001%) of the cost of
the unperformed portion for every day of delay. Once the
cumulative amount of liquidated damages reaches ten percent
(10%) of the amount of the contract, the Procuring Entity may
rescind or terminate the contract, without prejudice to other
courses of action and remedies available under the
circumstances.
 Administrative
Liabilities
and Sanctions
Administrative Liabilities
The following violations shall warrant administrative sanctions:
• Submission of eligibility requirements containing false
information or falsified documents.
• Submission of bids that contain false information or falsified
documents, or the concealment of such information in the
bids in order to influence the outcome of eligibility screening
or any other stage of the competitive bidding.
• Allowing the use of one’s name, or using the name of another
for purposes of public bidding.
• Withdrawal of a bid, or refusal to accept an award, or enter
into contract with the Government without justifiable cause,
after he had been adjudged as having submitted the LCRB or
HRRB. 5. Refusal or failure to post the required performance
security within the prescribed time.

• Termination of the contract due to the default of the bidder.

• Refusal to clarify or validate in writing its Bid during post-

qualification within a period of seven (7) calendar days from
receipt of the request for clarification.
• Any documented unsolicited attempt by a bidder to unduly
influence the outcome of the bidding in his favor.

• All other acts that tend to defeat the purpose of the

competitive bidding, such as an eligible contractor not buying
bid documents, and contractors habitually withdrawing from
bidding or submitting letters of non-participation for at least
three (3) times within a year, except for valid reasons.
• Without prejudice to the imposition of criminal sanctions or
the effects of civil liability, the Head of the Procuring Entity
shall impose on bidders or prospective bidders, the
administrative penalty of suspension for one (1) year for the
first offense, and suspension of two (2) years for the second
offense from participating in the public bidding process, as
well as disqualification from further participating in the public
bidding being undertaken by the Procuring Entity concerned,
where applicable, for any of the above violations. In addition
to the penalty of suspension, the bid security or the
performance security posted by the concerned bidder or
prospective bidder shall also be forfeited.
• The Head of the Procuring Entity may delegate to the BAC the
authority to impose the administrative penalties. The Head of
the Procuring Entity may preventively suspend any member of
the TWG, the BAC Secretariat, or the BAC if there are strong
reasons or prima facie evidence showing that the officials or
employees concerned are guilty of committing any of the acts
constituting criminal or civil liability, or for dishonesty as
defined by the Civil Service Laws. For uniformed personnel of
the AFP, the substantive and procedural due process under its
justice system shall be applied. In all cases, due process as
mandated by the Constitution and Civil Service laws, rules and
regulations, shall be strictly observed.
• Lifting of preventive suspension pending administrative
investigation, as well as removal of administrative penalties
and disabilities shall be in accordance with the provisions of
Sections 52 and 53, Chapter 6, Subtitle A (Civil Service
Commission), Title I, Book V of Executive Order No. 292,
otherwise known as the Administrative Code of 1987.
 Blacklisting
Guidelines
GPPB Resolution 09-2004 provides the guidelines that govern
the blacklisting of manufacturers, suppliers, distributors,
contractors and consultants involved in government
procurement for offenses or violations committed during
competitive bidding and contract implementation, in accordance
with Section 69.4 of the 2016 IRR, R.A. 9184.
Prohibition on blacklisted persons/entities to participate in the
bidding of Government Projects/Contracts

A person/entity that is blacklisted by a Procuring Entity and/or

included in the GPPB Consolidated Blacklisting Report shall not
be allowed to participate in the bidding of all government
projects during the period of disqualification unless it is delisted.
A joint venture or consortium which is blacklisted or which has
blacklisted member/s and/or partner/s as well as a
person/entity who is a member of a blacklisted joint venture or
consortium are, likewise, not allowed to participate in any
government procurement during the period of disqualification.
In the case of corporations, a single stockholder, together with
his/her relatives up to the third civil degree of consanguinity or
affinity, and their assignees, holding at least twenty percent
(20%) of the shares therein, its chairman and president, shall be
blacklisted after they have been determined to hold the same
controlling interest in a previously blacklisted corporation or in
two corporations which have been blacklisted; the corporations
of which they are part shall also be blacklisted.
Sanctions and Grounds for
Blacklisting
• During the competitive bidding stage, pursuant to Section 69
of R.A. 9184, the Procuring Entity shall impose on bidders or
prospective bidders the penalty of suspension for one (1) year
for the first offense, suspension for two (2) years for the
second offense from participating in the public bidding
process, without prejudice to the imposition of additional
administrative sanctions as the internal rules of the agency
may provide and/or further criminal prosecution, as provided
by applicable laws, for the following violations:
• Submission of eligibility requirements containing false
information or falsified documents.

• Submission of bids that contain false information or falsified

documents, or the concealment of such information in the
bids in order to influence the outcome of eligibility screening
or any other stage of the competitive bidding.

• Unauthorized use of one’s name, or using the name of the

name of another for purpose of public bidding.
• Withdrawal of a bid, or refusal to accept an award, or enter
into contract with the government without justifiable cause,
after he had been adjudged as having submitted the LCRB or
HRRB.
• Refusal or failure to post the required performance security
within the prescribed time. 6. Refusal to clarify or validate in
writing its Bid during post qualification within a period of
seven (7) calendar days from receipt of the request for
clarification.
• Any documented unsolicited attempt by a bidder to unduly
influence the outcome of the bidding in his favor.
• All other acts that tend to defeat the purpose of the
competitive bidding, such as but not limited to: an eligible
contractor not buying bid documents or not complying with
the requirements during bid evaluation, and contractors
habitually withdrawing from bidding or submitting letters of
non-participation for at least three (3) times within a year,
except for valid reasons.

In addition to the penalty of suspension, the bid security or the

performance security posted by the concerned bidder or
prospective bidder shall also be forfeited.
• During Contract Implementation Stage, pursuant to Section 69
(6) of R.A. 9184 and without prejudice to the imposition of
additional administrative sanctions as the internal rules of the
agency may provide and/or further criminal prosecution as
provided by applicable laws, the Procuring Entity shall impose
on contractors after the termination of the contract the
penalty of suspension for one (1) year for the first offense,
suspension for two (2) years for the second offense from
participating in the public bidding process, for violations
committed during the contract implementation stage, which
include but not limited to the following:
• Failure of the contractor, due solely to his fault or negligence,
to mobilize and start work or performance within the specified
period in the NTP;
• Failure by the contractor to fully and faithfully comply with its
contractual obligations without valid cause, or failure by the
contractor to comply with any written lawful instruction of the
Procuring Entity or its representative(s) pursuant to the
implementation of the contract. For the procurement of
infrastructure projects or consultancy contracts, lawful
instructions include but are not limited to the following:
• a. Employment of competent technical personnel, competent
engineers and/or work supervisors;
• b. Provision of warning signs and barricades in accordance with
approved plans and specifications and contract provisions;
• c. Stockpiling in proper places of all materials and removal
from the project site of waste and excess materials, including
broken pavement and excavated debris in accordance with
approved plans and specifications and contract provisions;
• d. Deployment of committed equipment, facilities, support
staff and manpower; and
• e. Renewal of the effectivity dates of the performance security
after its expiration during the course of contract
implementation.
• Assignment and subcontracting of the contract or any part
thereof or substitution of key personnel named in the
proposal without prior written approval by the Procuring
Entity.

• For the procurement of goods, unsatisfactory progress in the

delivery of the goods by the manufacturer, supplier or
distributor arising from his fault or negligence and/or
unsatisfactory or inferior quality of goods, as may be provided
in the contract;
• For the procurement of consulting services, poor performance
by the consultant of his services arising from his fault or
negligence. Any of the following acts by the consultant shall be
construed as poor performance:
• Defective design resulting in substantial corrective works in
design and/or construction;
• Failure to deliver critical outputs due to consultant’s fault or
negligence;
• c. Specifying materials which are inappropriate, substandard, or
way above acceptable standards.
• Allowing defective workmanship or works by the contractor being
supervised by the consultant.
• For the procurement of infrastructure projects, poor
performance by the contractor or unsatisfactory quality
and/or progress of work arising from his fault or negligence as
reflected in the Constructor's Performance Evaluation System
rating sheet. In the absence of the CPES rating sheet, the
existing performance monitoring system of the Procuring
Entity shall be applied. Any of the following acts by the
constructor shall be construed as poor performance:
• a. Negative slippage of fifteen percent (15%) and above within
the critical path of the project due entirely to the fault or
negligence of the contractor; and
• b. Quality of materials and workmanship not complying with the
approved specifications arising from the contractor's fault or
negligence.
• Willful or deliberate abandonment or non-performance of the
project or contract by the contractor resulting to substantial
breach thereof without lawful and/or just cause.

In addition to the penalty of suspension, the performance

security posted by the contractor shall also be forfeited