Unsolicited Proposal and Swiss Challenge in Philippine Government Procurement

Under Republic Act No. 12009, the New Government Procurement Act, an unsolicited proposal is considered through a procurement mode called Unsolicited Offer with Bid Matching. The Procuring Entity may consider an unsolicited offer on a negotiated basis for Goods and Consulting Services, but only if two conditions are met: the procurement involves a new concept or technology as determined by the Head of the Procuring Entity, and the Procuring Entity has invited comparative or competitive bids. The "Swiss challenge" is the mechanism that allows other parties to submit comparative or competitive bids, which the original offeror may then match.

What is an unsolicited proposal in Philippine procurement?

An unsolicited proposal is an offer submitted by a private party to a Procuring Entity without a prior request from the government. Under the New Government Procurement Act, this is not a stand-alone mode of procurement. Instead, it is treated as an unsolicited offer that must undergo a competitive process.

Section 30 of Republic Act No. 12009 governs this mode. It applies specifically to Goods and Consulting Services. The law does not treat unsolicited offers as automatically accepted; they must pass the two threshold conditions before the Procuring Entity may even consider them.

The two conditions before an unsolicited offer is considered

Before a Procuring Entity may act on an unsolicited offer, the law requires that:

1. The procurement involves a new concept or technology. The Head of the Procuring Entity makes this determination.
2. The Procuring Entity has invited comparative or competitive bids. This is the Swiss challenge component — the government opens the project to other bidders.

If either condition is absent, the unsolicited offer cannot be processed under this mode. This ensures that the procurement remains competitive and does not become a vehicle for direct negotiation with a single party.

How the Swiss challenge works under the law

The Swiss challenge is the process by which the Procuring Entity invites other parties to submit comparative or competitive bids against the original unsolicited offer. The original offeror is then given the opportunity to match the competing bid.

Section 30 of Republic Act No. 12009 provides that the contract shall be awarded to the original offeror if any of the following occurs:

• No comparative or competitive bid is received within the period prescribed in the IRR;
• The bids submitted by the comparative offerors failed at bid opening; or
• The original offeror matched or submitted a lower price proposal against the comparative or competitive bid.

This means the original offeror does not automatically win. The law gives the original offeror the right to match, but only if a valid competing bid exists. If a comparative bidder submits a better offer and the original offeror does not match it, the contract may be awarded to the comparative bidder.

Funding for unsolicited offer projects

Section 30 also provides that when the new concept or technology is acceptable, the Procuring Entity may secure funds from available sources. This is subject to government budgeting, accounting, and auditing rules. The law does not guarantee that funds will be available; the Procuring Entity must still comply with the usual fiscal requirements.

Where unsolicited offers fit in the modes of procurement

Section 26 of Republic Act No. 12009 lists the modes of procurement. Unsolicited Offer with Bid Matching is one of them, alongside competitive bidding, limited source bidding, competitive dialogue, direct contracting, and others. The Procuring Entity must adopt a mode consistent with the fit-for-purpose procurement approach.

The specific terms and conditions for applying each mode are specified in the IRR. The Government Procurement Policy Board is authorized to approve changes in the procurement process to adapt to improvements in modern and emerging technologies, provided these are consistent with the governing principles in Section 3 of the Act.

Frequently asked questions

Is an unsolicited proposal allowed under the New Government Procurement Act?

Yes, but only as an Unsolicited Offer with Bid Matching for Goods and Consulting Services. It requires that the procurement involve a new concept or technology as determined by the HoPE, and that the Procuring Entity has invited comparative or competitive bids.

Who wins in a Swiss challenge?

The contract is awarded to the original offeror if no comparative or competitive bid is received, if the comparative bids failed at bid opening, or if the original offeror matched or submitted a lower price proposal. Otherwise, the comparative bidder may win.

Does an unsolicited proposal need a Swiss challenge?

Yes. The law requires that the Procuring Entity invite comparative or competitive bids. The Swiss challenge is the mechanism that allows other parties to compete against the original offer.

Practical takeaways

• An unsolicited proposal is processed under the mode Unsolicited Offer with Bid Matching under Section 30 of Republic Act No. 12009.
• It applies only to Goods and Consulting Services, not to all types of procurement.
• Two conditions must be met: the procurement involves a new concept or technology as determined by the HoPE, and the Procuring Entity has invited comparative or competitive bids.
• The original offeror wins only if no comparative bid is received, if comparative bids fail at bid opening, or if the original offeror matches or submits a lower price.
• Funding for the project may be secured from available sources, subject to budgeting, accounting, and auditing rules.

Primary sources

The rules discussed above are drawn from the following primary sources, as published in the Official Gazette and the national statute book.

• IRR of REPUBLIC ACT NO. 12009 - THE IMPLEMENTING RULES AND REGULATIONS OF REPUBLIC ACT NO. 12009 OR THE NEW GOVERNMENT PROCUREMENT ACT

• REPUBLIC ACT NO. 12009 - AN ACT REVISING REPUBLIC ACT NO. 9184, OTHERWISE KNOWN AS THE "GOVERNMENT PROCUREMENT REFORM ACT", AND FOR OTHER PURPOSES

This article is general information and not legal advice. For your specific situation, consult a lawyer or ask ASG Legal AI.