Domestic Bidders Preference Act

Senate Office of the Secretarp TWENTIETH CONGRESS OF THE REPUBLIC OF THE PHILIPPINES 25 DEC 15 P1:10 First Regular Session RECEIVED BY: SENATE Senate Bill No. 1602 Introduced by Senator JOEL VILLANUEVA AN ACT GIVING PREFERENCE TO DOMESTIC BIDDERS PARTICIPATING IN GOVERNMENT PROCUREMENT PROJECTS EXPLANATORY NOTE The Philippine government is one of the largest buyers of goods and services in the country. Through public procurement, it has the power to influence markets, encourage innovation, and promote inclusive economic growth. For this reason, government spending should not only fulfill immediate operational needs, it should also serve as a deliberate tool to support local industries and Filipino workers. Article XII, Section 12 of the 1987 Constitution mandates the State to promote the preferential use of Filipino labor, domestic materials, and locally produced goods. This principle is echoed in the Government Procurement Reform Act and its implementing rules, which already contain policy statements favoring local suppliers. Yet, the lack of a clear, standardized system for certifying and prioritizing domestic bidders has limited the effectiveness of this mandate. This bill seeks to address that gap by institutionalizing a clear certification program for Domestic Bidders, thereby providing them with a meaningful advantage in participating in government procurement projects. It defines what constitutes a "domestic bidder" and sets clear criteria for determining whether goods are substantially grown, produced, or manufactured in the Philippines. It also mandates the creation of a dedicated Domestic Bidders Certificate, valid for two years, to be issued and regulated by the Department of Trade and Industry (DTI) through the Competitiveness Bureau.

This measure aims to ensure that the billions spent annually by the government on procurement benefit not just public institutions but also local enterprises, workers, and communities. By giving preference to Filipino suppliers and producers, the State strengthens domestic industries, generates quality jobs, and builds economic resilience, especially in the countryside. This measure draws from a similar proposal filed during the 19th Congress by Senator Sonny Angara. It builds on the same objective of strengthening local industries through strategic use of government procurement. In view of the foregoing, the immediate passage of this bill is earnestly sought. OEL, VILLANUEVA

Senate Office of the fortretarp TWENTIETH CONGRESS OF THE REPUBLIC OF THE PHILIPPINES ) 25 DEC 15 P1:10 First Regular Session ) RECEIVED BY: SENATE Senate Bill No. 1602 Introduced by Senator JOEL VILLANUEVA AN ACT GIVING PREFERENCE TO DOMESTIC BIDDERS PARTICIPATING IN GOVERNMENT PROCUREMENT PROJECTS Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled:

SECTION 1. Short Title. - This Act shall be known as the "Domestic

Bidders Preference Act".

SEC. 2. Declaration of Policy. - Section 12, Article XII, of the

Constitution declares that the "State shall promote the preferential use of Filipino labor, domestic materials and locally produced goods, and adopt measures that help make them competitive." To this end, the State shall provide an enabling environment for the 8 domestic private sector to mobilize its resources to promote Filipino labor, 9 domestic materials, and locally produced goods. As enunciated in the 10 Constitution and other economic policies, the government shall foster local 11 participation in the procurement process by providing preference to products 12 made in and/or sourced from the Philippines. It is further declared that the State shall pursue a policy of maintaining a reasonable balance between its obligations under international treaties or agreements and enhancement of competitiveness of Philippine trade and local industries. These may include implementation of programs/projects/ activities

1 intended to improve the quality of industry outputs and services, as well as the 2 domestic entities productivity, through improvement in business systems and process and the flow of inputs and outputs.

SEC. 3. Definition of Terms. - For purposes of this Act, the following

terms are hereby defined as follows: 6 a) Bidder refers to a manufacturer, supplier, or distributor who submits a bid in response to the requirements of the Bidding Documents; b) Director refers to the Competitiveness Bureau Director; 9 c) Domestic Bidder refers to any person or entity offering unmanufactured articles, materials or supplies of the growth or production of the Philippines, or manufactured articles, materials, or supplies manufactured or to be manufactured in the Philippines substantially from articles, materials, or supplies of the growth, production, or manufacture, as the case may be, of the Philippines; d) Foreign Bid refers to any offer of articles, materials or supplies not manufactured or not to be manufactured in the Philippines, substantially from articles, materials, or supplies of the growth, production, or manufacture, as the case may be, of the Philippines; e) Goods refer to all items, supplies, and materials which may be needed in the transaction of public businesses or in the pursuit of any government undertaking, project or activity, whether in the nature of equipment, furniture, stationery, materials for construction, or personal property of any kind; f) Grown refers to products produced by cultivation such as crops, or products that are grown, raised, and harvested; g) Manufactured means conversion of raw materials into marketable form through physical, mechanical, chemical, electrical, biochemical, biological or other means or by a special treatment or a series of actions. It shall include transformation which can be geometric or compositional, or both. Merely packing or packaging shall not qualify as manufactured; h) Produced refers to the creation or formation of goods through a natural process;

Procuring Entity refers to any branch, constitutional commission or office, agency, department, bureau, office, or instrumentality of Government of the Philippines, including Government-Owned or -Controlled Corporation, Government Financial Institutions, State University and College, and local government units procuring goods, infrastructure projects and consulting services; = Secretary refers to the Secretary of the Department of Trade and Industry; and Secretariat refers to the Supply Chain and Logistics Management Division of the Competitiveness Bureau tasked to provide the assessment, verification, and recommendation to the Committee for approval or disapproval.

SEC. 4. Application. - Only a domestic bidder may file an application

for certification for domestic preference. The application shall be filed at the Supply Chain and Logistics Management Division of the Competitiveness Bureau.

SEC.5. Evaluation. - Verification of the origin of the goods sought to be

certified shall be done through ocular inspection of the site where the goods were grown, produced or manufactured. The Secretariat shall submit an Inspection Report to the Committee containing a statement as to whether the goods offered for bidding satisfy or do not satisfy the requirements for a Domestic Bidder's Certificate and the basis for such finding.

SEC. 6. Approval or Denial of Application. - After evaluation, if the

Secretariat finds that an applicant conforms to and meets the requirement for a Domestic Bidder's Certificate, the Director shall approve the application and issue the corresponding Certificate. If the application is denied, the Director shall issue a written notification specifying the grounds for the denial of the application. Where no request for reconsideration is filed, the denial of the application shall become final. The denial shall be without prejudice to re-filing of application.

SEC.7. Determination of Substantial Compliance. - Prospective

2 bidders shall only be granted a Domestic Bidder's Certificate and apply for 3 domestic preference when the goods, supplies, or materials offered for bidding are substantially grown, produced, or manufactured in the Philippines. 5 a) In determining whether the goods are substantially grown and produced in the Philippines, the following general principles shall be considered: 1. The origin of the product shall be disputably presumed as that which is indicated in the label; 2. Livestock born and raised within the Philippines are deemed originated in the Philippines; and 3. Plants grown and produced within the Philippines are deemed originated in the Philippines. b) In determining whether the goods are substantially manufactured in the Philippines, the following general principles shall be considered: 1. Manufacture of industrial goods or processing of agricultural products into (a) semi-finished/intermediate goods for use as inputs in the production of other goods, or (b) finished products for final consumption, shall be deemed manufactured or processed in the Philippines. 2. Casting or molding, forming, machining, or joining/assembly of raw materials, and the production of discrete parts to transform materials from one form to another valuable form encompasses manufacturing. Mere packing or packaging shall not constitute manufacturing. Simple processing covering any or a combination of activities such as cleaning, sorting, shredding, pulverizing, grinding, crushing, compacting, dissolving and filtration shall also not be considered manufacturing.

SEC. 8. Composition of the Committee. - A Committee of Three shall

be established to review the recommendation of the Secretariat, and to grant or deny each application.

The Committee shall be composed of the head of agency of the 2 Competitiveness Bureau as Chair, with third level officials from any of the 3 following Department of Trade and Industry agencies: Regional/Provincial Offices, Bureau of International Trade Relations, Board of Investments, 5 Competitiveness and Ease of Doing Business Group, Consumer Protection 6 Group and Management Services Group. 7 Except for the officials and staff of the Competitiveness Bureau, the 8 Committee members and technical staff shall be entitled to receive an 9 honorarium subject to the existing rules and regulations issued by the 10 Department of Budget and Management and the Commission on Audit, charged to the Competitiveness Bureau.

SEC.9. Domestic Bidders Certificate. -

a) The Certification shall remain valid for a period of two (2) years. It shall include the scope, validity, remarks or conditionalities. It is non- transferable and limited only to the products specified in the scope. b) Subject to notice and hearing, the Certificate shall be revoked for any of the following grounds: 1. Making material false statement in the application required of the Bidder when a true statement would have warranted the Secretariat's denial or to recommend Certification; Making false representations as a matter of fact, whether or not the same results in damage or legal injury to a third party, after the Certification has been issued; and Any other circumstance analogous to the foregoing.

SEC. 10. Implementing Rules and Regulations. - The Within one

hundred twenty (120) days from the effectivity of this Act, the Department of Trade and Industry (DTI) and other relevant stakeholders, in consultation with relevant government agencies and stakeholders, shall promulgate the implementing rules and regulations (IRR) to carry out the provisions of this Act.

Failure of the relevant government agencies to promulgate the IRR within 2 the specified period shall subject the heads of these government agencies to 3 administrative penalties under applicable civil service laws. Should the IRR contain provisions that are contrary to this Act, the heads 5 of the government agencies responsible for such provision, when done in bad 6 faith or with gross negligence, shall be held administratively liable.

SEC. 11. Separability Clause. - If any portion or provision of this Act

is declared unconstitutional, the remainder hereof or any provisions not 9 affected thereby shall remain in force and effect.

SEC. 12. Repealing Clause. - Any law, presidential decree or issuance,

executive order, letter of instruction, rule, or regulation inconsistent with the provisions of this Act is hereby repealed or modified accordingly.

SEC. 13. Effectivity. - This Act shall take effect fifteen (15) days after

its complete publication in the Official Gazette or in a newspaper of general circulation. Approved,