Foreign-funded government procurement: An examination of the proprietary and implication of characterizing a foreign loan agreement as an executive agreement

Arvin A. Jo

College

Ramon V. Del Rosario College of Business

Department/Unit

Commercial Law

Document Type

Dissertation

Publication Date

2009

Abstract

No less than the Constitution has given the President a wide discretion in the field of foreign relations, as s/he alone has the power to negotiate treaties and international agreements. In the exercise of this power, the President may completely exclude Congress, although in case of treaties and international agreements the concurrence of at least two-thirds of all the members of the Senate is necessary for such to be binding. Aside from treaties and international agreement, there is another form of internationally-binding agreement, one that doesn't require legislative concurrence -this is known as Executive Agreement. The validity of Executive Agreement has long been sanctioned by our courts as such is merely intended to carry out detail-adjustment well established national policies. In recent years, Foreign Loan Agreements, in conjunction with exchange of notes or communications related thereto, that are entered into to fund government procurements projects, have been characterized' as Executive Agreements.

Ordinarily, the government procurement of infrastructure projects should undergo competitive bidding as mandated and in' accordance with the Government Procurement Reform Act (R.A. 9184). Sec. 4 however of such statute which states that "any treaty or international er executive agreement affecting procurement to which the Philippine government is a signatory shall ·be observed" has been interpreted by officials of the Executive branch as a blanket authority to exempt the procurement project from competitive bidding and other mandatory provisions of R.A. 9184, when the terms of the "Executive Agreement is to that effect or in any manner inconsistent with the RA. 9184.

Some of such procurement projects that were exempted from competitive bidding are the botched National Broadband Network (NBN) Project worth $330 Million, the Northrail Project worth $840 Million, and the$33 Million World Bank (WB) Road Projects. The NBN Project was recently cancelled by the President due to allegations made in a Senate inquiry that such project was overpriced by $130 Million. Meanwhile, the $33 Million World Bank (WB) Road Projects was subjected to competitive bidding, though it was a bidding process that was in accordance with the WB rules but against the provision of R.A. 9184 on Approved Budget on Contract.

Clearly, the determination of whether· Sec. 4 of R.A. 9184 allows such Executive Agreements involving foreign-funded procurement projects to be exempted from the application of RA. 9184, should be carefully evaluated, keeping in mind that the power to contract foreign loan is an exclusive constitutional power of the President. Nevertheless, it must be noted that an executive agreement, being an exclusive act of the Executive branch, does not have the status of a statute; though we must also not lose track of other statutes such as the Foreign Borrowings Act (RA 4860) and the Official Development Assistance Act of 1996 (RA 8182) that are relevant on this matter.

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Disciplines

Administrative Law

Keywords

Philippines—Foreign relations—Executive agreements; Government purchasing—Law and legislation—Philippines

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