Easy to Understand Guide on the Grant of Honoraria to Government Personnel Involved in Government Procurement

What is Honoraria?

Honoraria is a form of compensation granted to individuals for the performance of tasks or involvement in activities beyond their regular functions.

Equity calls for equal compensation for performance of substantially similar duties, with substantially similar degrees of responsibility. Propriety dictates that only persons who have successfully completed their tasks or participated in accomplished activities ought to be [compensated]. (Item 4.0, DBM Budget Circular No. 2004-5A)

Who can be paid honoraria and for what condition?

The chairs and members of the Bids and Awards Committee (BAC) and the Technical Working Group (TWG) may be paid honoraria only for successfully completed procurement projects. (Item 5.1, DBM Budget Circular No. 2004-5A)

What constitutes “successfully completed procurement projects”?

Pursuant to Section 7 of the Implementing Rules and Regulations Part A (IRR-A) of RA No. 9184, a procurement project refers to the entire project identified, described, detailed, scheduled and budgeted for in the Project Procurement Management Plan (PPMP) prepared by the agency.

A procurement project shall be considered successfully completed once the contract has been awarded to the winning bidder. (Item 5.1, DBM Budget Circular No. 2004-5A)

Is the payment of honoraria applicable to all kinds of procurement projects?

No. The payment of honoraria shall be limited to procurement that involves competitive bidding only.

Competitive bidding activities are present only in:

• Open and competitive;

• Limited source bidding;

• Negotiated procurement under Section 53 (a) of the IRR, where there has been failure of bidding for the second time; and

• Negotiated procurement under Section 53 (b) of the IRR following the procedures under Section 54.2 (b) thereof, whereby the procuring entity shall draw up a list of at least (3) suppliers or contractors which will be invited to submit bids.

Conversely, honoraria will not be paid when procurement is thru:

• Direct contracting;

• Repeat order;

• Shopping;

• Negotiated procurement under Section 53 (b) of the IRR following the procedures under Section 54.2 (d) thereof, whereby the procuring entity directly negotiates with previous supplier, contractor or consultant, or when the project is undertaken by administration or thru the AFP, in case of infrastructure projects; and

• Negotiated procurement under Section 53 (c) to (g) of the IRR. (Item 5.2, DBM Budget Circular No. 2004-5A)

How much is the maximum honoraria that may be paid to each personnel involved in government procurement?

The honoraria of each person shall not exceed the rates indicated below per completed procurement project:

The average amount of honoraria per month over one year shall not exceed twenty five percent (25%) of the basic monthly salary. The honoraria, however, shall be paid only upon the successful completion of each procurement. (Item 5.3 and 5.4, DBM Budget Circular No. 2004-5A)

Are all government personnel involved in government procurement entitled to honoraria?

Yes. Provided, the personnel is duly assigned as chair or member of the BAC or the TWG by the head of the department/agency concerned. (Item 5.5, DBM Budget Circular No. 2004-5A)

Personnel who are receiving honoraria for their participation in procurement activities shall no longer be entitled to overtime pay for procurement-related services rendered in excess of official working hours. (Item 5.10, DBM Budget Circular No. 2004-5A)

Whose personnel who are involved in government procurement are not entitled to honoraria?

▪️The members of the BAC Secretariat whose positions are in the Procurement Unit of the agency shall not be entitled to honoraria. However, the payment of overtime services may be allowed, subject to existing policy on the matter. (Item 5.6, DBM Budget Circular No. 2004-5A)

▪️Personnel involved in procurement activities other than those identified in the Circular are likewise not entitled. In lieu of honoraria, the payment of overtime services may be allowed for the administrative staff, such as clerks, messengers and drivers supporting the BAC, the TWG and the Secretariat, for procurement activities rendered in excess of official working hours. The payment of overtime services shall be in accordance with the existing policy on the matter. (Item 5.7 and 5.9, DBM Budget Circular No. 2004-5A)

▪️By reason of jurisprudence, a Department Undersecretary or Assistant Secretary who concurrently serves in the BAC, in whatever capacity, shall not be entitled to honoraria. (Item 5.8, DBM Budget Circular No. 2004-5A)

Where to get funds for the payment of honoraria i.e., funding source?

The amount necessary for the payment of honoraria and overtime pay authorized under BC No. 2004-5A dated October 7, 2005 shall be sourced from the following:

▪️Collections from successfully completed procurement projects limited, however, to activities prior to awarding of contracts to winning bidders:

• Proceeds from sale of bid documents;

• Fees from contractor/supplier registry;

• Fees charged for copies of minutes of bid openings, BAC resolutions and other BAC documents;

• Protest fees; and,

• Proceeds from bid security forfeiture.

Pursuant to the DOF-DBM-COA Permanent Committee Resolution No. 2005-2 dated June 2005, all agencies are authorized to treat the collections from the sources identified above as trust receipts to be used as exclusively for the payment of honoraria and overtime pay herein authorized.

Agencies may utilize up to one hundred percent (100%) of the said collections for the payment of honoraria and overtime pay. Any excess in the amount collected shall be remitted by NGAs to the Bureau of the Treasury.

In the case of GOCCs and LGUs, the same shall form part of their corporate or local government funds, respectively. (Item 6.2, DBM Budget Circular No. 2004-5A)

▪️Savings realized from the current year specific budget of the agency under the General Appropriations Act (GAA).

▪️In the case of GOCCs, savings from the DBM-approved corporate operating budgets.

▪️In the case of LGUs, savings from the local budgets approved by their respective Sanggunian subject to the pertinent provisions of R.A. 7160 (Local Government Code of 1991). (Item 3.1, 3.1.1, 3.1.2, 3.1.3 and 3.1.4, DBM Budget Circular No. 2007-3)

[READ: Additional Use of Proceeds from the Sale of Bidding Documents as Recommended by the GPPB]

What’s the definition of savings as far as the grant of honoraria for personnel involved in government procurement is concerned?

Savings refer to portions or balances of agencies’ budgets as referred to in items 3.1.2, 3.1.3 and 3.1.4 above, free from any obligation of encumbrance which are:

▪️still available after the completion or final discontinuance or abandonment of the work, activity or purpose for which the appropriation is authorized;

▪️arising from unpaid compensation and related costs pertaining to vacant positions and leaves of absences without pay; and,

▪️realized from the implementation of collective negotiation agreements which resulted in improved systems and efficiencies and thus enabled an agency to meet and deliver the required or planned targets, programs and services at lesser cost. (Item 3.2, DBM Budget Circular No. 2007-3)

It is understood that the use of agency savings for payment of honoraria and overtime pay for procurement activities shall be made only after satisfying said mandatory expenditure items. (Item 3.3, DBM Budget Circular No. 2007-3)

The manner of payment of honoraria and overtime pay to entitled government personnel to be charged against collections from successfully completed procurement projects (activities prior to awarding of contracts to winning bidders) enumerated under item 3.1.1 and savings cited under item 3.2 DBM Budget Circular No. 2007-3 shall be in accordance with item 6.2 of DBM Budget Circular No. 2004-5A , except use of savings by national government agencies which shall follow the General Provision of the GAA on the disbursement of funds, i.e., through the National Treasury and/or authorized servicing banks under the Modified Disbursement Scheme.

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The rules and regulations above are applicable to all national government agencies (NGAs) including state universities and colleges (SUCs), government-owned or controlled corporations (GOCCs) and local government units (LGUs).