Section 35Sec./Art. 35

Negotiated Procurement. - Negotiated procurement shall be allowed only in the following instances:

(a) Two Failed Biddings. In case of two (2) failed biddings, as provided in Section 64 hereof;

(b) Emergency Cases. In case of imminent danger to life or property during a state of calamity, or when time is of the essence arising from natural or man-made calamities or other causes where immediate action is necessary to prevent damage to or lose of life or property, or to restore vital public services, infrastructure facilities, and other public utilities;

(c) Take-Over of Contracts. Take-over of contracts which have been rescinded or terminated for causes provided for in the contract and existing laws, where immediate action is necessary to prevent damage to or loss of life or property, or to restore vital public services, infrastructure facilities, and other public utilities;

(d) Adjacent or Contiguous. Where the subject contract is adjacent or contiguous to an ongoing Infrastructure Project or Consulting Service: Provided, That the original contract is the result of a competitive bidding; the subject contract to be negotiated has similar or related scope of work; it it within the contracting capacity of the contractor; the contractor uses the same prices or lower unit prices as in the original contract less mobilization cost; the amount involved does not exceed the amount of the ongoing project; and the contractor has no negative slippage: Provided, further, That negotiations for the procurement are commenced before the expiry of the original contract.

Whenever applicable, this principle shall also govern consultancy contracts, where the consultants have unique experience and expertise to deliver the required service;

(e) Agency-to-Agency. Procurement of Goods, Infrastructure Projects, and Consulting Services from another agency of the government which has the mandate and absorptive capacity to undertake the project, as certified by the servicing agency and validated by the Procuring Entity;

(f) Scientific, Scholarly or Artistic Work, Exclusive Technology and Media Services, Where Goods, Infrastructure Projects and Consulting Services can be contracted to a particular supplier, contractor or consultant and as determined by the HoPE, for any of the following:

(1) Work of art; commissioned work or services for creative design or a specific artist skill;

(2) Restorative works for the conservation of historical and culturally significant structures;

(3) Scientific, academic, scholarly work or research, or legal service;

(4) Highly-specialized life-saving medical and biotech equipment and devices, medicine, supplies, materials, tools and consumables, as certified by the Department of Health (DOH);

(5) Scientific technical, economic, business, trade or legal journal, magazine, paper, subscription, or other exclusive statistical publications and references; or

(6) Media documentation, advertisement, or announcement through television, radio, newspaper, internet, and other communication media;

(g) Highly Technical Consultants. In the case of individual consultants hired to do work that is (1) highly technical or proprietary; or (2) primarily confidential or policy determining: Provided, That in both instances, trust and confidence are the primary considerations for the hiring of the consultant: Provided, however, That the term of the individual consultant shall, at the most, be on a yearly basis, renewable at the option of the appointing HoPE, but in no case shall exceed the term of the latter;

(h) Defense Cooperation Agreements and Inventory-Based Items. The Secretary of National Defense may directly negotiate with an agency or instrumentality of another country with which the Philippines has entered into a defense cooperation agreement or otherwise maintains diplomatic relations when the procurement involves major defense equipment or material and/or defense-related consultancy services, subject to the following conditions:

(1) The Secretary of National Defense has deemed it necessary in order to protect the interest of the country;

(2) The expertise or capability required is not locally available; and

(3) The defense equipment or material and/or defense related consultancy services to be procured under this modality is included in the Armed Forces of the Philippines Modernization Program previously approved by the President of the Philippines.

In the interest of national security, the Secretary of National Defense may also directly negotiate with a supplier or manufacturer in procuring inventory-based items, pertaining to major defense equipment or material, subject to the following conditions:

(1) Direct negotiation will address compatibility, interoperability, and sustainability;

(2) The supplier or manufacturer has fully and satisfactorily implemented a contract of the same item with the Department of National Defense (DND), any of its bureaus or attached agencies, or law enforcement agencies; and

(3) The supplier or manufacturer shall provide a performance security in accordance with this Act.

Law enforcement agencies may utilize this mode when the aforementioned conditions are met. These agencies are the Philippine National Police (PNP), including the PNP Maritime Group (PNP-MG) and the PNP Aviation Security Group (PNP-AVSEGROUP), Philippine Drug Enforcement Agency (PDEA), Bureau of Immigration (BI), Office for transportation Security (OST), Bureau of Fire Protection (BFP), National Bureau of Investigation (NBI), Presidential Security Group (PSG), National Police Commission (NAPOLCOM), Bureau of Jail Management and Penology (BJMP), Bureau of Corrections (BuCor), and Philippine Coast Guard (PCG);

(i) Lease of Real Property and Venue. For lease of real property and venue for official use, it is preferred that government agencies lease publicly-owned real property or venue from other government agencies. If there is an available publicly-owned real property or venue that complies with the requirements of the Procurement Entity, it may enter into a contract of lease with the government-agency owner. In the event that the Procuring Entity would resort to privately-owned real property or venue, the end-user unit shall justify that the same is more efficient and economical to the government;

(j) NGO Participation, When an appropriation law or ordinance earmarks an amount to be specifically contracted out to non-government organizations (NGOs), the Procuring Entity may enter into a MOA with an NGO;

(k) Community Participation. The Procuring Entity may directly purchase agricultural and fishery products from local farmers and fisherfolk and directly negotiate simple Infrastructure Projects with local communities or social groups or members thereof. For this purpose, community or social groups may be classified as organized or unorganized. Organized community of social group (OCSG) shall refer to a community or social group that has a defined organizational structure, identified membership and leadership, adopts a principle of shared responsibility for their actions and shall be registered with the appropriate regulatory bodies.

It shall include Microenterprises. Unorganized community or social group (UCSG) shall refer to a community or social group that is not registered with any government regulatory body or a member of a duly recognized private organization, which include, but are not limited to, community labor or "pakyaw" groups, social enterprises, associations of barangay health workers, farmers, fisherfolk, women, elderly, indigenous peoples, parent-teacher association, solo parents, and persons with disabilities;

(l) United Nations (UN) Agencies, International Organizations or International Financing Institutions. Procurement from specialized agencies of the UN, international organizations or international financing institutions, of any of the following:

(1) Small quantities of off-the-shelf goods, exclusively used in education and health;

(2) Specialized products where the number of suppliers is limited, such as vaccines;

(3) Goods and Consulting Services involving advanced technologies, techniques, and innovations not locally available as certified by the DTI, when it is most advantageous to the Procuring Entity; or

(4) Goods for critical public health priorities as determined by the DOH;

(m) Direct Retail Purchase of Petroleum Fuel, Oil and Lubricant (POL) Products, electronic charging devices, and Online Subscriptions. Direct retail pruchase of POL products, electronic charging devices, and online subscriptions not available in the PS-DBM may be made by end-users delegated to procure the same from identified direct suppliers or service providers, where goods and services are required by a Procuring Entity for the efficient discharge of its principal functions or day-to-day operations.

Online subscriptions includes: (1) computer software and applications such as video conferencing applications, computer-aided design and drafting applications, office productivity tools, and system protection software; (2) electronic publications, reference materials and journals; (3) off-the-shelf software and applications, except internet and cloud computing services; and (4) web-based services.

The GPPB may provide an amendment on the above enumeration or make an additional type of negotiated procurement subject to the following conditions:

(1) The Procuring Entity has requested the GPPB for the use of negotiated procurement of Goods, Infrastructure Projects or Consulting Services with utmost necessity and justification;

(2) The GPPB shall have findings that any of the existing modes of procurement will be impossible or defeats the purpose of the procurement;

(3) The Goods, Infrastructure, Projects or Consulting Services are better identified by the Procuring Entity on its distinctiveness and uniqueness to a procurement program, activity or project; and

(4) Other circumstances that may be identified by the GPPB which justifies the addition of a new type of negotiated procurement that will address the concerns of one or more government agencies.