DTI seeks to relax public bidding requirements for startups

The Department of Trade and Industry (DTI) wants procurement eligibility requirements to be relaxed to allow startups to participate in bidding for government contracts.

DTI Undersecretary for the Competitiveness and Innovation Group Rafaelita M. Aldaba said that the amendment of the Government Procurement Reform Act will play a big role in addressing the challenges faced by startups that want to participate in public biddings. She noted many startups have difficulty in passing eligibility requirements.

“Given the existing difficulties of startups to participate in government biddings, it’s almost impossible for them. Hence, it is important that we are able to amend the procurement law while taking into consideration that we have these startups and they’re not comparable to large companies,” she said on the sidelines of the opening ceremony of the Philippine Startup Week 2023.

Ms. Aldaba said large companies have their own legal teams that can prepare all the necessary requirements and documents to be able to participate in public biddings.

Under the implementing rules and regulations (IRR) of the Republic Act (RA) 9184 or the Government Procurement Reform Act, parties interested in joining the public bidding should submit a statement of their single largest completed contract to the Bid and Awards Committee and statement of all ongoing government and private contracts, among others.

“The startups are in a different situation. They are not big earners and it’s the first time for them to be participating in government procurements so, it’s almost impossible for them to produce all the necessary documents that are required by the government for huge companies that are participating,” the DTI official said.

The IRR also states that bidders must submit financial documents such as audited financial statements and computation of their net financial contracting capacity.

Ms. Aldaba said that the government should be the first to procure products and services from startups as this is how it is actually being done in other countries.

“There are a lot of new platforms being introduced by startups which can be utilized by the government for as long as we’re able really to come up with a more flexible system that would enable us to procure from these new startups that are entering the market,” she said.

“You can just imagine the revenue impact and the economic impact that can be created if we’re able to support the products coming from our startup community,” she added.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said revisions to the bidding requirements will allow more small and medium enterprises (SMEs) and startups to qualify for public biddings.

“Some SMEs and startups could lack the scale such as capitalization, structure, track record, among others, when it comes to complying with the requirements of the law,” Mr. Ricafort said in a Viber message.

“There is a need to be more responsive to the latest developments and provide a more level playing field for more supplies, while also ensuring compliance with financial, quality, performance, and other quality standards,” he added.

Foundation of Economic Freedom President Calixto V. Chikiamco said that it is high time now to amend the law not only to attract more participation from smaller companies but also to improve competition in public bidding.

“It is high time that the government amend the procurement law, specifically the Filipino first provisions which mandate that the government is obligated to give the contract to a Filipino company even if its bid is 20% above a competing bid from a foreign supplier,” said Mr. Chikiamco in a Viber message.

He said the provision should be amended to favor Filipino suppliers but only if their bid is the same as that of a competing foreign supplier.

“The amendment is necessary in order for the government to save money and elicit more competition in public bids,” he added.

The amendments to the Government Procurement Reform Act are part of the priority measures of the Legislative-Executive Development Advisory Council.

The House Committee on Revision of Laws last week approved its version of the bill, which also calls for broader use of electronic processes and preferential treatment for domestic suppliers.

According to Ms. Aldaba, the amendments that the department is pushing for are also present in Senate Bill (SB) No. 2426 or the proposed Tatak Pinoy (Proudly Filipino) Strategy Act authored by Senator Juan Edgardo M. Angara.

The bill seeks to raise the competitiveness of Philippine products made by small companies through giving domestic products the priority for government procurement.

“We are also discussing with Senator Angara the possibility of amending some of the provisions [of the RA 9118] through the Tatak Pinoy Bill,” Ms. Aldaba said.

“Hopefully, we will be able to really come up with some solutions that would support the participation of startups in government procurement through the Tatak Pinoy bill,” she added.

The Senate approved the Tatak Pinoy bill on the third reading on Nov. 6, while the House has yet to approve its version of the measure.

The Philippine startup ecosystem is currently valued at $3.5 billion and is projected to double by the end of the Marcos administration.

“We are expecting it to grow. In the next five years, we want it to double and reach $10 billion by the end of the Marcos administration,” Ms. Aldaba said. — By Justine Irish D. Tabile, Reporter