Procurement Procedures:

NEGOTIATED PROCUREMENT OF GOODS

EMERGENCY CASES

Negotiated Procurement is a method of procurement of goods whereby the procuring entity

directly negotiates a contract with a technically, legally, and financially capable supplier.

It may be resorted to in emergency cases or in any of the following cases:

a. After 2 failed biddings,
b. Agency-to-Agency,
c. Procurement Agent,
d. Defense Cooperation Agreement,
e. Small-Value Procurement,
f. NGO Participation,
g. United Nations Agencies.

I. APPROVAL OF THE ALTERNATIVE METHOD OF PROCUREMENT

A. AUDIT OBJECTIVE:

To verify if the adoption of the Alternative Method: Negotiated Procurement in Emergency Cases was
in accordance with the rules and regulations

B. SUB-OBJECTIVES, CRITERIA, VALIDATION PROCEDURES & SUGGESTED WORKING PAPER

Documents needed for evaluation:

1. copy of the approved Minutes of Pre-Procurement Conference duly certified by the BAC
Secretariat;
2. BAC Resolution recommending negotiated procurement, duly approved by the HOPE;

Suggested Audit Working Paper

Audit Sub-objective
Audit Activities Audit Question Yes No Particulars
 Audit Criteria of the
Answer
1. To verify if the BAC validated 1. From the BAC Did the BAC
the existence of an emergency as Resolution, look for validation of an
follows: information on the BAC’s emergency as
validation of an follows:
a. imminent danger to life or
emergency as follows:
property during a state of a. imminent danger to life a. imminent danger
calamity, or or property during a to life or property
b. time is of the essence arising state of calamity, or during a state of
from natural or man-made b. time is of the essence calamity?
calamities or other causes arising from natural or
where immediate action is man-made calamities or
necessary to prevent damage or other causes where b. time is of the
to or loss of life or property, or immediate action is essence arising
necessary to prevent from natural or
to restore vital public services,
damage to or loss of man-made
infrastructure facilities and life or property, or to calamities or other
other public utilities restore vital public causes where
 Suggested Audit Working Paper
Audit Sub-objective
Audit Activities Audit Question Yes No Particulars
 Audit Criteria of the
Answer
services, infrastructure immediate action
Implementing Rules and Regulations
facilities and other is necessary to
(IRR) of RA 9184, as amended on
public utilities prevent damage to
September 2, 2009:
or loss of life or
 53.2. Emergency Cases. In case of property, or to
imminent danger to life or property restore vital public
during a state of calamity, or when services,
time is of the essence arising from infrastructure
natural or man-made calamities or facilities and other
other causes where immediate action public utilities?
is necessary to prevent damage to or
loss of life or property, or to restore
vital public services, infrastructure
facilities and other public utilities.

2. To verify if the BAC: 2. From the BAC Did the BAC validate
Resolution, look for the justification for
a. validated the justification for information on the adoption of the
adoption of the adoption of BAC’s validation of the alternative method of
Negotiated Procurement, an justification for procurement:
alternative method of adoption of the Negotiated
procurement, alternative method of Procurement?
b. validated that there was no procurement:
splitting, Negotiated
Procurement and Did the BAC validate
and
recommendation of that there was no
c. through a Resolution said method to the “splitting”?
recommended said method HOPE for approval.
to the HOPE for approval
Did the BAC
Implementing Rules and Regulations recommend
(IRR) of RA 9184, as amended on Negotiated
September 2, 2009: Procurement, an
 48.3. The method of procurement to alternative method,
to the HOPE for
be used shall be as indicated in the
approval?
Approved Procurement Plan (APP). If
the original mode of procurement
recommended in the APP was public
bidding but cannot be ultimately
pursued, the BAC, through a
Resolution, shall justify and
recommend the change in the mode
of procurement to be approved by
the HOPE.

 54.1. Splitting of Government

Contracts is not allowed. Splitting of
Government Contracts means the
division or breaking up of GOP
contracts into smaller quantities and
amounts, or dividing contract
implementation into artificial phases
or sub-contracts for the purpose of
 Suggested Audit Working Paper
Audit Sub-objective
Audit Activities Audit Question Yes No Particulars
 Audit Criteria of the
Answer
evading or circumventing the
requirements of law and this IRR,
specially the necessity of public
bidding and the requirements for the
alternative methods of procurement.

3. To verify if the HOPE 3. From the BAC Did the HOPE

approved the alternative method Resolution approve Negotiated
of procurement: Negotiated recommending the Procurement as the
negotiated procurement method of
Procurement
as an alternative method, procurement?
look for the approval of
Implementing Rules and Regulations
the HOPE.
(IRR) of RA 9184, as amended on
September 2, 2009:
 48.3. The method of procurement to
be used shall be as indicated in the
Approved Procurement Plan (APP). If
the original mode of procurement
recommended in the APP was public
bidding but cannot be ultimately
pursued, the BAC, through a
Resolution, shall justify and
recommend the change in the mode
of procurement to be approved by
the HOPE.
EVALUATING AUDIT EVIDENCES GATHERED AND COMMUNICATING THE RESULTS OF AUDIT
1. To verify the effects of Analyze the instances of
instances of non-compliance on non-compliance to Appropriate Audit Working Papers
the: establish the effects and
develop appropriate audit
a. validity of the procurement recommendations.
activities and outputs
including the validity of the Also determine if
resulting contract; appropriate actions were
taken by the auditee in
b. validity of any payment to be regard to instances of
made on the basis of the non-compliance.
contract;
c. etc.
and develop appropriate audit NOTE:
recommendations Also refer to the
OFFENSES AND
Implementing Rules and Regulations PENALTIES portion of
(IRR) of RA 9184, as amended on this Audit Guide.
September 2, 2009:
13.3. Observers shall be invited at least
three (3) calendar days before the date of
the procurement stage/activity. The
absence of observers will not nullify the
BAC proceedings, provided that they
have been duly invited in writing.
 Suggested Audit Working Paper
Audit Sub-objective
Audit Activities Audit Question Yes No Particulars
 Audit Criteria of the
Answer
2. To verify the causes of Analyze the instances of
instances of non-compliance and non-compliances to Appropriate Audit Working Papers
develop appropriate audit establish the cause(s) and
develop appropriate audit
recommendations
recommendations.

Also determine if
appropriate actions were
taken by the auditee in
regard to instances of
non-compliance.

NOTE:
Also refer to the
OFFENSES AND
PENALTIES portion of
this Audit Guide.

3. To communicate the results of Prepare the appropriate

the audit with the auditee’s audit/ validation document Audit Observation Memorandum (AOM), if
Management reflecting the results of applicable
the audit/validation and
 COA Circular No. 2009-006 dated transmit to Management
September 15, 2009 re- Prescribing the
Use of the Rules and Regulations on
Settlement of Accounts

NOTES:
1. Based on the following requirement of the Manual of Procedures for the Procurement of Goods Vol. 2
published by the GPPB:
o Methodology: How is Negotiated Procurement undertaken?
…
4. …The procedures for the conduct of public bidding should be observed.
for the rest of the procurement procedures up to the award of the contract, the Audit Guide on the Procedures:
Competitive/Public Bidding are to be observed.

2. Other relevant criteria

Implementing Rules and Regulations (IRR) of RA 9184, as amended on September 2, 2009:
 54.4. Except for Limited Source Bidding under Section 49 of this IRR, submission of bid securities may be
dispensed with.
54.5. Performance and warranty securities, as prescribed in Sections 39 and 62 of this IRR, shall be submitted for
contracts acquired through the alternative methods of procurement, except for Shopping under Section 52 and
Negotiated Procurement under Sections 53.2 emergency cases), 53.9 (small value procurement), 53.10 (lease of
real property), and 53.13 (UN agencies).